Conventional Loans
A conventional loan is simply a mortgage that isn’t insured or guaranteed by a government agency. It’s the most common loan type in the U.S., and the one most buyers end up with when they have steady, documented income and solid credit.
These loans are typically sold to Fannie Mae or Freddie Mac after closing, which is why they follow a well-worn set of guidelines — and why so many lenders offer them. That competition generally means more options and sharper pricing for well-qualified borrowers.
You don’t need a huge down payment to go conventional, despite the old “20% down” myth. Low down payment options exist — the trade-off is usually private mortgage insurance until you build enough equity.
Equal Housing Opportunity. All loans subject to credit approval. Terms and conditions apply.
At a glance
- Down payment
- Low down payment options available — a large down payment is not required
- Loan purpose
- Purchase or refinance of a primary residence, second home, or investment property
- Who it’s for
- Borrowers with good credit and steady, documented income who want the widest choice of lenders and loan structures
- Mortgage insurance
- Private mortgage insurance (PMI) is typically required with a smaller down payment, and can usually be removed once you have enough equity
How it works
Get a clear picture of your finances
We look at your income, debts, credit history, and savings together — before any application — so you know where you stand.
Get pre-qualified
I review your full picture and tell you plainly what price range fits. Sellers take offers far more seriously with a real pre-qualification behind them.
Apply and lock your structure
We complete the application, choose fixed vs. adjustable and your term, and lock in the loan structure that fits your plans.
Underwriting and appraisal
An underwriter verifies your income, assets, and employment, and an appraiser confirms the home’s value. I manage this end to end and flag issues early.
Close
You sign, funds move, keys change hands. Then I keep watching your loan for PMI-drop and refinance opportunities after closing.
Good to know (honest trade-offs)
PMI isn’t permanent
With a smaller down payment you’ll typically pay private mortgage insurance each month. The honest upside: unlike some government loan insurance, PMI can usually be removed once you build enough equity — I track this for clients after closing.
Stronger credit is typically rewarded
Conventional pricing tiers by credit score more aggressively than government loans. Even a modest score improvement before you apply can meaningfully change your options — ask me about timing.
Conforming loan limits apply
There’s a maximum loan amount for conventional loans, set annually. Need more than that? That’s where jumbo loans come in.
No upfront mortgage insurance premium
Unlike FHA, there’s no large upfront insurance fee financed into the loan — your insurance cost is the monthly PMI, which eventually goes away.
Is this right for you?
A conventional loan is often the best fit when you have steady, documentable income — W-2 wages, salary, or long-established self-employment — and a credit history you’ve kept in good shape. If you’re planning to stay in the home for many years, the ability to drop PMI over time can make conventional the lowest lifetime-cost option among low-down-payment choices.
It may be less ideal if your credit history is thin or bruised, or your income is hard to document — in those cases FHA or bank statement programs may fit better. That’s a conversation, not a verdict: talk to me about your situation and I’ll map the real options.
Frequently asked questions
Do I really need 20% down for a conventional loan?
No — that’s the most persistent myth in mortgages. Low down payment conventional options exist. A larger down payment helps you avoid PMI and often gets better pricing, but it is not a requirement.
How do I get rid of PMI?
Typically, once you’ve built enough equity in the home, PMI can be removed — either automatically over time, by requesting cancellation, or through a new appraisal showing sufficient equity. The exact path depends on your loan’s terms, and I walk clients through it after closing.
Can I use a conventional loan for a second home or investment property?
Yes. Conventional loans cover primary residences, second homes, and investment properties, though down payment and reserve expectations are generally higher for non-primary homes.
What’s the difference between conforming and jumbo?
Conforming loans stay within annually-set loan limits and can be sold to Fannie Mae or Freddie Mac. Above those limits, you’re in jumbo territory, which has its own guidelines and typically stricter requirements.
Can gift funds be used for the down payment?
Generally yes, with proper documentation showing the funds are a gift and not a loan. Your loan officer will tell you exactly what paper trail the underwriter needs — get the guidance before the money moves.
Fixed or adjustable rate — which should I choose?
It depends on how long you plan to keep the loan. A fixed rate gives payment certainty; an adjustable rate can offer lower initial payments if you expect to move or refinance within several years. We’ll run both scenarios with honest math.
Talk it through with Jet Ameti
Every situation is different — and program guidelines change. Tell me where you stand and I'll give you a straight answer on whether Conventional fits, and what else might. Subject to credit and property approval.
Important: All calculations on this site are estimates for educational purposes only and do not constitute a loan offer, approval, or commitment to lend. Your actual rate, payment, and terms depend on credit approval and will be provided by your loan officer.