Thinking about buying a home and wondering if a conventional loan is right for you? You’re not alone. This FAQ breaks down the most common questions about conventional loans — in plain language — so you can move forward with confidence.
What is a conventional loan?
A conventional loan is a home loan that is not backed by a government agency like the FHA, VA, or USDA. Instead, it follows guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises that buy mortgages from lenders. Because there’s no government guarantee, lenders typically look for stronger credit and financial history. Conventional loans are one of the most widely used mortgage options for homebuyers today.
What credit score do I need for a conventional loan?
Most lenders require a minimum credit score of 620 to qualify for a conventional loan. That said, a higher score — generally 740 or above — can help you access more competitive rates. Your credit score is just one part of the picture; lenders also look at your income, debt load, and the size of your down payment. If your score is below 620, other loan options may be worth exploring.
How much do I need to put down on a conventional loan?
You can put down as little as 3% on a conventional loan if you meet certain eligibility requirements. Most homebuyers put down somewhere between 5% and 20%. If your down payment is less than 20%, you’ll typically be required to pay private mortgage insurance, or PMI. PMI protects the lender — not you — in case of default, and it adds to your monthly payment until you build enough equity in your home.
What is PMI and when can I stop paying it?
PMI stands for private mortgage insurance, and it’s a monthly cost added to your payment when your down payment is less than 20% of the home’s value. The good news is that PMI on a conventional loan is not permanent. Once you reach 20% equity in your home — either through paying down your loan balance or through home value appreciation — you can request to have PMI removed. By law, lenders must cancel it automatically when your loan balance reaches 78% of the original purchase price.
How is a conventional loan different from an FHA loan?
The main difference is who backs the loan. FHA loans are insured by the Federal Housing Administration, which allows lenders to offer them to homebuyers with lower credit scores or smaller down payments. Conventional loans have no government backing, so the qualification standards are generally a bit stricter. However, conventional loans can be a stronger option for homebuyers with good credit because they may come with lower overall costs — especially if you can put 20% down and avoid PMI altogether.
What are the loan limits for a conventional loan?
Conventional loans have a maximum loan amount set each year by the Federal Housing Finance Agency, or FHFA. For 2026, the baseline conforming loan limit is $806,500 for a single-family home in most parts of the country. In higher-cost areas, that limit can be significantly higher. Loans that exceed these limits are called jumbo loans and come with their own set of requirements. Your loan officer can tell you the specific limits that apply to your area.
Can I use a conventional loan to buy a second home or investment property?
Yes, conventional loans can be used to buy a primary home, a second home, or an investment property. Keep in mind that the requirements are often stricter for second homes and investment properties — you may need a larger down payment and a stronger credit profile. Primary homes typically have the most favorable terms. If you’re exploring options beyond your primary home, it’s a good idea to talk through the specifics with a loan officer before you start shopping.
How long does it take to close on a conventional loan?
Most conventional loans close in 30 to 45 days from the time your offer is accepted, though timelines can vary. Getting pre-approved before you start house hunting can help speed things up significantly. Delays often happen when documents are missing or when the appraisal takes longer than expected. Staying organized and responsive throughout the process is one of the best ways to keep things moving on schedule.
Still have questions? The Integrity Home Lending team is here to help. Whether you’re just starting to explore your options or you’re ready to take the next step, we’d love to walk you through the process.
Ready to see if a conventional loan is the right fit for you? Connect with an Integrity Home Lending loan officer today — no pressure, just answers.
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