Why Choose a Conventional Loan?

A conventional loan is the most common mortgage type, offering a wide range of terms and down payment options. Unlike FHA, USDA, or VA loans, these are not directly insured by the government, which often means more flexibility for borrowers with solid credit and stable income.

Whether you are buying your first home or upgrading to a larger property, a conventional loan provides a reliable path to homeownership with the potential to eliminate mortgage insurance once you build 20% equity.

The Key Benefits

  • Low Down Payment Options: Purchase your home with as little as 3% down.
  • No Upfront Mortgage Insurance: Unlike FHA loans, there is no large upfront premium due at closing.
  • Cancellable PMI: Once you reach 20% equity, you can request to have your Private Mortgage Insurance removed.

Conventional Loan Requirements

To qualify for a conventional mortgage, lenders typically look for a few key financial markers:

Requirement Standard Guideline
Minimum Credit Score None (with 20% down). *600 is required for PMI.
Minimum Down Payment 3% (First-time) or 5% (Standard)
Debt-to-Income (DTI) Generally 43% to 45%
Loan Limits Must stay within Conforming limits (varies by county)

Is a Conventional Loan Right for You?

Conventional loans are ideal for borrowers who:

  • Credit Score: Have a credit score of 620 or higher.
  • Down Payment: Have at least 3% to 5% for a down payment.
  • Long-Term Savings: Plan to stay in their home long enough to build 20% equity and cancel mortgage insurance.

Expert Tip From Kevin

“Conventional loans often offer the lowest overall cost of borrowing over the life of the loan. If you have the credit score to qualify, this is usually the first program we look at to maximize your long-term savings.”

Ready to start your Northwest homebuying journey?

The mortgage market moves fast, especially here in the Northwest. The best first step is a quick pre-approval to see exactly what you qualify for before you start your search.

📝Fill out the form on the right (down below on mobile), and I’ll personally reach out to review your goals and find the best conventional program for your needs.

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Conventional Loan FAQ’s

What is the difference between a fixed rate loan and adjustable rate loan?

Fixed-rate loans have the same interest rate throughout their lifespans while adjustable rate loans begin with low introductory rates, then – after a specific term (say 5, 7, or 10 years) – will begin to adjust annually. The rate would increase or decrease at that time, depending on the state of the market.

How much of a down payment do I really need for a Conventional loan?

While many people believe you need 20% down, that is a myth. Qualifying first-time homebuyers can often put down as little as 3%, and repeat buyers can often qualify with 5% down. This allows you to keep more of your savings for home improvements or emergencies.

When can I stop paying Private Mortgage Insurance (PMI)?

One of the biggest benefits of a Conventional loan is that PMI isn’t permanent. Once you build 20% equity in your home through monthly payments or home appreciation, you can request to have the PMI removed. This can save you hundreds of dollars on your monthly payment.

How do I start the home loan process?

Whether your goal is to take out a new loan or refinance your existing loan, I’ll be here for you every step of the way. To get the process started, don’t hesitate to fill out my convenient online form.