Conventional Loans
Conventional loans are mortgages that are not insured by a government agency. They can offer competitive financing for qualified borrowers buying or refinancing a primary residence, second home, or investment property.
- Eligible primary-home programs with down payments as low as 3%
- Fixed-rate and adjustable-rate mortgage options
- Financing for primary, second-home, and investment occupancy
- Purchase, rate-and-term refinance, and cash-out options
Explore My Conventional Loan Options
Tell us your purchase price, down payment, property type, and goals. A loan professional can compare eligible conventional and alternative programs.
Get My Loan Options →Estimate a PaymentWhat Is a Conventional Mortgage?
A conventional mortgage is funded by a private lender rather than insured by the FHA, guaranteed by the Department of Veterans Affairs, or backed by another government loan program. Many conventional loans follow standards used by Fannie Mae or Freddie Mac. Loans that fit those standards are often called conforming loans.
Conventional does not mean one-size-fits-all. The available structure depends on the purpose of the loan, property, occupancy, loan size, credit, income, assets, debts, and reserves. MyLoanDesk compares options across its wholesale lender network instead of limiting the review to a single lender's menu.
Down Payment and Private Mortgage Insurance
A 20% down payment is not always required. Some programs permit as little as 3% down for eligible primary-residence buyers, while second homes, investment properties, multi-unit properties, and other scenarios commonly require more. Funds may come from verified savings, eligible gifts, proceeds from another property, or other acceptable sources, depending on the program.
When the down payment is below 20%, private mortgage insurance may be required. PMI cost is based on factors such as loan-to-value, credit profile, coverage, and insurer. Unlike many government mortgage insurance structures, conventional PMI may be cancellable or may terminate after the loan reaches the required equity position, subject to the loan terms and applicable rules.
Property and Loan Options
Primary residences
Options may include low-down-payment programs, gift funds, and eligible seller credits.
Second homes
Financing may be available for an eligible property used personally for part of the year.
Investment properties
Eligible one-to-four-unit rentals may qualify with appropriate down payment, reserves, income, and documentation.
Refinances
Rate-and-term and cash-out options may help change terms, consolidate liens, or access eligible equity.
Review the complete range of mortgage refinance options before replacing an existing loan.
Fixed-Rate vs. Adjustable-Rate Conventional Loans
A fixed-rate mortgage keeps the principal-and-interest rate unchanged for the loan term, creating payment predictability. An adjustable-rate mortgage, or ARM, typically begins with a fixed introductory period and may then adjust under the note's index, margin, and caps. Compare the starting payment, adjustment rules, maximum potential payment, closing costs, and how long you expect to own the property.
Conventional vs. FHA Loans
| Factor | Conventional | FHA |
|---|---|---|
| Insurance | PMI may apply below 20% down | Upfront and annual mortgage insurance generally apply |
| Occupancy | Primary, eligible second homes, and investments | Generally an owner-occupied primary residence |
| Credit | Pricing can be more sensitive to credit and risk | May offer more flexibility for some credit profiles |
| Property | Conventional property and project standards | FHA eligibility and minimum property standards |
Neither program is automatically better. Review the rate, mortgage insurance, payment, cash to close, property requirements, and long-term cost for the same scenario. Read our FHA vs. conventional comparison or explore FHA loans.
What Lenders Review
- Credit score, payment history, and recent credit activity
- Stable, documentable income and employment or self-employment history
- Monthly obligations compared with qualifying income
- Down payment, closing funds, reserves, and source of funds
- Property type, condition, value, occupancy, and project eligibility
- The complete loan-to-value and risk profile
If traditional income documentation does not reflect how you earn, a bank statement loan may be worth comparing. Buyers above conforming loan sizes can also review jumbo loan options.
How the Process Works
Review your goals. Purchase or refinance, property use, timing, payment target, and available funds.
Compare eligible structures. Evaluate down payment, fixed or adjustable rate, PMI, credits, and estimated costs.
Document the application. Provide the income, asset, credit, identity, and property information needed for underwriting.
Appraisal and underwriting. The lender reviews the property and complete file before issuing a final decision.
Close after final approval. Review final disclosures, satisfy closing conditions, and sign the loan documents.
Conventional Loan FAQs
Do I need 20% down for a conventional loan?
No. Some conventional programs allow eligible primary-residence buyers to purchase with as little as 3% down. The required amount depends on the program, occupancy, property type, credit profile, income, assets, and other underwriting factors. Private mortgage insurance usually applies when the down payment is below 20%.
What credit score is needed for a conventional mortgage?
Many conventional programs start with a qualifying score around 620, but approval and pricing depend on the complete application. Credit history, debt-to-income ratio, reserves, loan-to-value, property, and occupancy are also considered, and individual lenders may apply additional requirements.
Can I use a conventional loan for an investment property?
Yes. Conventional financing may be available for eligible one-to-four-unit investment properties as well as primary residences and second homes. Investment-property loans generally require more down payment and reserves than a primary-residence loan.
What is private mortgage insurance?
Private mortgage insurance, or PMI, protects the lender when a conventional borrower makes a smaller down payment. The cost varies by loan-to-value, credit profile, coverage, and insurer. Depending on the loan and applicable rules, PMI may later be cancelled or terminate after sufficient equity is reached.
Can gift funds be used for the down payment?
Eligible gift funds may be accepted for certain conventional transactions. The source, donor relationship, transfer, occupancy, and borrower contribution requirements vary, so the gift should be discussed and documented before funds are moved.
Can I refinance an existing FHA loan into a conventional loan?
Potentially. A conventional refinance may be useful when the new loan improves the borrower's overall costs, terms, or mortgage-insurance structure. Available equity, credit, income, property value, closing costs, and the expected time in the loan should be compared before deciding.
Get My Loan Options
Compare conventional financing with FHA, VA, jumbo, and specialty programs based on your actual property and financial profile.
Educational information only. This is not a commitment to lend, guarantee of approval, or quote. Programs, rates, costs, terms, property eligibility, and underwriting requirements vary by lender and may change.
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