Loan Programs

Conventional Loans

The most popular loan type in America, and for good reason. Low down payments, competitive rates, and PMI that actually goes away.

What Is a Conventional Loan?

A conventional loan is any mortgage that isn't backed by a government agency like the FHA, VA, or USDA. Instead, these loans follow guidelines set by Fannie Mae and Freddie Mac — the two government-sponsored enterprises that purchase most mortgages in the United States. This is the standard, bread-and-butter home loan that most buyers end up using.

Conventional loans come in two flavors: conforming and non-conforming. Conforming loans stay within the loan limits set by the Federal Housing Finance Agency (currently $806,500 in most areas, higher in high-cost counties). If you need more than that, you're looking at a jumbo loan.

If you put less than 20% down on a conventional loan, you will pay private mortgage insurance (PMI) — but unlike FHA, conventional PMI cancels once you reach 80% loan-to-value, and automatically falls off at 78%.

As a wholesale broker, I shop conventional loan pricing across multiple lenders on every deal. I find you the best rate and terms available for your specific credit profile, down payment, and property type. I also consider things like closing timeline and what you have going on in your personal life.

Key Benefits

Low Down Payment

Put as little as 3% down if you're a first-time homebuyer, or 5% for repeat buyers. You don't need 20% to buy a home. That's one of the biggest myths in real estate.

PMI Cancels Automatically

Unlike FHA loans where mortgage insurance can last forever, conventional PMI automatically drops off when you reach 78% loan-to-value. You can also request removal at 80%.

Competitive Rates

Conventional loans typically offer the best interest rates, especially if your credit score is 740 or above. And as a broker, I'm pulling pricing from dozens of lenders to get you the lowest available.

Flexible Property Types

Primary residences, second homes, and investment properties are all eligible. Conventional loans also work for condos, townhomes, and multi-unit properties up to 4 units.

Requirements

  • ✓ Credit Score: 620 minimum. Best rates kick in at 740+.
  • ✓ Down Payment: 3% for first-time buyers, 5% standard. 20% eliminates PMI.
  • ✓ DTI Ratio: Generally up to 45%, though some exceptions allow up to 50%.
  • ✓ Employment: Two years of consistent employment history. Self-employed borrowers need 2 years of tax returns.
  • ✓ Reserves: Typically 0-6 months depending on property type and loan amount.

Who Is This For?

Conventional loans are ideal for buyers with solid credit, generally 620 or above, though you'll see the best pricing at 740+. They work well for:

  • → First-time homebuyers who want the lowest possible monthly payment
  • → Repeat buyers moving up, downsizing, or relocating
  • → Buyers who want to avoid permanent mortgage insurance
  • → Second home or investment property purchases
  • → Anyone refinancing to lower their rate or remove PMI
  • → People in Texas looking to do a cash-out refinance (Texas 50(a)(6) loans)

Frequently Asked Questions

Most conventional loans require a minimum credit score of 620, though better rates are available at 740+. Both Fannie Mae and Freddie Mac publish their underwriting standards; I help you understand where you stand and what options are available. You can pull your free annual report at AnnualCreditReport.com.
As little as 3% for first-time homebuyers, or 5% for repeat buyers. A 20% down payment eliminates PMI, but it is not required. Often, some of the better rates are with lower down payments.
Private Mortgage Insurance (PMI) is required when you put less than 20% down. It automatically falls off when you reach 78% loan-to-value, or you can request removal at 80% (per the federal Homeowners Protection Act). There are other routes as well — for example, documenting significant upgrades to the property can support a new valuation and help show you have enough equity to remove PMI sooner.
Yes! Conventional loans allow gift funds from family members for down payment and closing costs with proper documentation. There are certain guidelines that will need to be followed, and there are exceptions to who can provide the gift.
Conventional loans cap interested party contributions (including seller concessions) based on how much you put down, occupancy, and how many units the property has. On a primary single-family home, typical limits are about 3% of the purchase price when you put less than 10% down, about 6% when you put at least 10% but less than 25% down, and up to about 9% when you put 25% or more down. Second homes, investment properties, and 2- to 4-unit homes have lower caps. Only certain costs can be paid with those funds, and the contract has to match what the lender will allow. I will confirm the exact percentage and line items for your scenario before you lock in seller-paid terms.

Related reading

Compare

VA vs. Conventional in Texas

When the VA loan beats conventional, when conventional wins, and how PMI vs. funding fee changes the math.

Read the comparison →

First-time buyers

First-Time Homebuyer Guide

Step-by-step walk-through covering 3% down conventional, FHA, USDA, and Texas down payment assistance.

Start the guide →

Refinance

Cash-Out Refinance in Texas

The Texas Section 50(a)(6) rules that govern cash-out refinancing here, and what they mean for your equity.

Read the guide →

Budget math

How Much House Can I Afford?

The real math behind a healthy budget — DTI, PITI, reserves, and how to keep room for life.

Run the numbers →

Ready to explore conventional loan options?

Apply in minutes, or schedule a quick call to talk through your situation.

Apply Now Schedule a Call
Apply Now