Conventional Today's Mortgage Rates
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Conventional
FHA
VA
USDA
Jumbo
📊 Source: St. Louis Federal Reserve
Key Benefits of Conventional Loans
Conventional loans are not backed by a government agency, giving borrowers more flexibility in terms, down payment options, and property types.
Flexible Down Payment Options
Put as little as 3% down on your home purchase, making homeownership more accessible without the need for a large upfront investment.
No Upfront Mortgage Insurance Fee
Unlike FHA loans that require an upfront mortgage insurance premium, conventional loans have no upfront insurance fee, reducing your closing costs.
Higher Loan Limits Than FHA
Conventional loans offer higher borrowing limits compared to FHA loans, allowing you to finance more expensive properties without needing a jumbo loan.
PMI Cancellation at 20% Equity
Once you reach 20% equity in your home, you can request to cancel your private mortgage insurance (PMI), lowering your monthly payment over time.
Conventional Loan Eligibility
To qualify for a conventional loan, lenders typically evaluate the following criteria:
Credit Score
Most lenders require a minimum credit score of 620 for conventional loans. Higher scores (740+) will qualify you for the best available interest rates and terms.
Debt-to-Income Ratio
Your total monthly debt payments, including the new mortgage, should typically be under 45% of your gross monthly income. Lower ratios improve your chances of approval.
Down Payment
Conventional loans require a down payment ranging from 3% to 20%. Putting down less than 20% will require private mortgage insurance (PMI) until you build sufficient equity.
Stable Employment History
Lenders typically look for at least two years of consistent employment history to demonstrate your ability to reliably make mortgage payments over the life of the loan.
Meeting these requirements doesn't guarantee approval, but they provide a strong foundation. We'll work with you to evaluate your full financial picture and find the best loan option.
The Conventional Loan Process
Pre-Qualification
We'll review your credit, income, and financial situation to determine how much you can borrow and which conventional loan program best fits your needs.
House Hunting
With your pre-approval in hand, work with your real estate agent to find a home that fits your budget and lifestyle within the approved loan amount.
Home Appraisal
Once you've found a home and made an offer, we'll arrange for a professional appraisal to confirm the property's value supports the loan amount.
Loan Processing
We'll gather and verify all required documentation, including income verification, asset statements, and employment history, to prepare your loan file.
Underwriting
Our underwriters will thoroughly review your application, credit history, and all supporting documents to make a final loan approval decision.
Closing
Once approved, you'll review and sign your final loan documents, pay any remaining closing costs, and receive the keys to your new home!
Frequently Asked Questions
What's the minimum down payment for a conventional loan?
First-time homebuyers can put as little as 3% down on a conventional loan. For repeat buyers, the minimum is typically 5%. Putting 20% or more down eliminates the need for private mortgage insurance (PMI).
How is a conventional loan different from FHA?
Conventional loans are not government-backed, which means they typically offer better interest rates for borrowers with good credit. Unlike FHA loans, conventional loan PMI can be removed once you reach 20% equity, and there is no upfront mortgage insurance premium.
What credit score do I need for a conventional loan?
The minimum credit score for a conventional loan is typically 620. However, a score of 740 or higher will qualify you for the best available interest rates and most favorable loan terms.
Can I use a conventional loan for investment property?
Yes, conventional loans can be used to purchase investment properties. However, the down payment requirement is typically higher, ranging from 15% to 25% depending on the property type and the number of units.
What is the minimum credit score for a conventional loan?
Most lenders require a minimum credit score of 620 for a conventional loan. Borrowers with scores of 740 or higher typically qualify for the best available interest rates and lowest private mortgage insurance costs.
How much down payment do you need for a conventional loan?
First-time buyers can put down as little as 3% on a conventional loan, while repeat buyers typically need a minimum of 5%. Putting down 20% or more allows you to avoid private mortgage insurance (PMI) entirely.
What is the difference between conventional and FHA loans?
Conventional loans are not government-backed and typically require higher credit scores (620+), but offer the ability to cancel PMI once you reach 20% equity. FHA loans are insured by the Federal Housing Administration, allow lower credit scores and down payments, but require mortgage insurance for the life of the loan in most cases.
When can I remove PMI on a conventional loan?
You can request PMI removal once your loan balance reaches 80% of the home's original value. PMI is automatically terminated when the balance reaches 78% of the original value, provided you are current on payments.
What is the maximum DTI for a conventional loan?
Most conventional loans cap debt-to-income (DTI) at 45%, though some borrowers with strong compensating factors like high credit scores or large reserves may qualify with a DTI up to 50%. A lower DTI improves both your approval odds and your interest rate.
Can I use gift funds for a conventional loan down payment?
Yes, conventional loans allow gift funds from family members for the down payment on a primary residence. The gift must be properly documented with a gift letter, and for some loan programs the borrower may need to contribute a minimum portion of their own funds.