Conventional Loans: Requirements, Limits, and How They Work
A conventional loan is a mortgage funded through private lenders and investors — most commonly Fannie Mae and Freddie Mac — rather than insured by a government agency. It’s the most widely used mortgage in America. In 2026, conforming loans reach $832,750 for a single-family home in most counties, and qualifying first-time buyers can put as little as 3% down under Fannie Mae and Freddie Mac guidelines.
3%
Minimum down payment for qualifying first-time buyers under agency guidelines
620
Typical minimum credit score — stronger scores earn stronger pricing
$832,750
2026 conforming loan limit in most counties (single-family)
20%
Equity level where private mortgage insurance (PMI) can go away
Figures reflect 2026 agency guidelines and FHFA loan limits. Limits are higher in some counties — we’ll check yours. Last reviewed: August 12, 2026.
YOUR EUREKA MOMENT
The moment most buyers relax: learning that strong credit buys real flexibility — and that PMI isn’t forever. Seeing what your profile actually unlocks is a Eureka moment.
Run your real numbers →Who Conventional Loans Are Built For
The kitchen-table version: if your credit is in good shape, conventional is usually the benchmark to beat — the loan every other option gets compared against.
The full picture: conventional loans reward strong credit with better pricing and cheaper mortgage insurance, and they’re the most flexible on property type — primary homes, second homes, and investment properties are all fair game. PMI (the insurance you pay when putting less than 20% down) can be removed once you build 20% equity, which is the big long-term advantage over FHA’s insurance. You don’t need 20% down to start — that’s the most stubborn myth in home buying.
What You’ll Need to Qualify
- Credit score: Generally 620 or higher, with meaningfully better pricing as scores climb into the 700s.
- Down payment: As little as 3% for qualifying first-time buyers, and commonly 5% for everyone else. Below 20% down, PMI applies — it’s temporary, not forever.
- Debt-to-income ratio: The share of monthly income going to debts — typically up to 45%, sometimes higher with strong compensating factors.
- Loan amount: Up to $832,750 in most counties in 2026, and up to $1,249,125 in designated high-cost counties. Above that, see our jumbo loan options.
- Documentation: Standard income and asset paperwork — W-2s, pay stubs, bank statements.
Conventional or FHA? The Honest Comparison
Strong credit usually points conventional: PMI costs less and disappears at 20% equity, while FHA insurance typically lasts the life of the loan at the minimum down payment. Lower scores or thinner savings usually point FHA, where pricing stays gentler. We price both side by side for every buyer and let your numbers make the call — no loyalty to either program, just arithmetic.
Conventional Loan Questions We Hear Every Week
No — that’s the most persistent myth in mortgages. Qualifying first-time buyers can put down as little as 3% under agency guidelines, and 5% is common for repeat buyers. What 20% gets you is no PMI — but PMI is temporary, and waiting years to save 20% often costs more than paying it.
Generally 620 or higher. The more useful truth: conventional pricing is tiered, so a 740 score gets noticeably better terms than a 640. If you’re near a tier boundary, we’ll tell you — sometimes a few months of credit work changes the math more than shopping ten lenders.
Private mortgage insurance is what lets you buy with less than 20% down — it protects the lender, and you pay for it monthly. The good news: you can request removal at 20% equity, it drops automatically at 22%, and rising home values can get you there faster than the payment schedule alone. That cancellation is conventional’s biggest edge over FHA.
Up to $832,750 for a single-family home in most counties, and up to $1,249,125 in designated high-cost counties. Need more house than that? That’s a jumbo loan — we do those too.
Yes — conventional is the most flexible program for property types: primary residences, second homes, and investment properties. Down payment and pricing step up as the property gets further from “home you live in,” and we’ll map those tiers for you before you shop.
See What Conventional Looks Like With Your Numbers
The program matters less than the payment. Run your own numbers in 60 seconds, or sit down with us and we’ll compare conventional against everything else you qualify for. No consultation fees, ever.
Conventional loans are originated through private lenders under Fannie Mae and Freddie Mac guidelines; individual lender requirements and overlays apply. This page is educational and does not constitute loan approval or terms; all loans are subject to underwriting and approval.