Conventional Loan - Facts, Rates and Eligibility.
- Conventional Loans have a very competitive interest rate and lower closing cost compared to FHA or a VA Loan.
- There is no mortgage insurance [MI] options available in a conventional loan.
- If you are buying a home, there are low down payment options available in a conventional loan.
- A Conventional Loan Program is available for Primary, Secondary and Investment home.
- Conventional Loans have flexible loan terms such as 15, 20 and 30 years.
Basics of a Conventional Loan.
In simple terms, a Conventional Loan is a loan which is not backed by the government. They are offered through Banks, Mortgage Lenders, Credit Unions or a private mortgage companies.
Some Conventional Mortgage Loans may be guaranteed by Government Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac.
As of November 16th 2025, Fannie Mae and Freddie Mac both do not have a minimum credit score requirement for their conventional loan qualification guideline. For a Conventional Mortgage Loan, approval will be based on evaluation of overall credit risk factor. Conventional Loans are quite popular, in 2024, roughly 63% homeowners used conventional loan financing to purchase single family homes.
Do you Qualify for a Conventional Loan?
(1) Meet the Conforming Loan Criteria set by Fannie Mae and Freddie Mac : As of 12th December 2025, loan amount under $806,500 is considered a conforming loan for most parts within the United States. Areas of Hawaii, Guam, Alaska have higher limits. Beyond that limit, loans are called non-conforming or jumbo loans.
(2) Meet the credit profile requirements : Some Conventional Loans that are backed by Fannie Mae and Freddie Mac do not require a minimum credit score for eligibility however, the ones that are offered by Credit Unions, Mortgage Lenders and Companies directly may still need you to have a certain minimum FICO score. Besides FICO score, you may need to stay within a certain Debt to Income Ratio, have employment history for a certain number of years and have your overall credit worthiness in good standing.
(3) Down Payment for new home buyers : You can buy a home with as little as 3.00% down with a Conventional Loan program. However, down payment less than 20.00% usually attracts Private Mortgage Insurance or PMI. So it is important for you to consider the extra cost per month if you decide to put less than 20% down.
Questions? Speak with a Qualified Mortgage Specialist.
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Mortgage Rates as on 07/30/2026
Conventional Loans
Rates for Primary Home Purchase
6.78%
(+0.02%)
6.32%
(+0.01%)
FHA & VA Loans
Rates for Primary Home Purchase
6.34%
(+0.02%)
6.36%
(+0.02%)
Weekly US Average Mortgage Rates as on 07/30/2026. Select a product to view important disclosures, payments, assumptions, and APR information. Please note we offer additional home loan options not displayed here. Rates for Primary Home Purchase.
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Toll Free +1(877)466.1211Frequently Asked Questions
A conventional mortgage is a home loan that is not insured or guaranteed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA).
Unlike FHA or VA loans, conventional mortgages are not backed by the government. They typically have stricter qualification criteria, but they offer more flexibility in terms of loan amounts, property types, and loan terms.
The down payment requirements for conventional loans can vary, but generally, a down payment of at least 3% to 5% of the home's purchase price is common. However, a higher down payment may be required to avoid private mortgage insurance (PMI).
PMI is insurance that protects the lender in case the borrower defaults on the loan. It is typically required when the down payment is less than 20%. Borrowers can request the removal of PMI once they reach 20% equity in the home.
Yes, conventional loans can be used for various property types, including primary residences, second homes, and investment properties. This flexibility is not always available with government-backed loans.
Advantages include competitive interest rates, flexible loan terms, and the ability to finance a wide range of property types. Additionally, once a certain level of equity is reached, borrowers can eliminate PMI.
While specific requirements can vary among lenders, a higher credit score is generally needed for a conventional mortgage. A credit score of 580 or higher is often considered the minimum, but higher scores can result in better interest rates.
The LTV ratio is the ratio of the loan amount to the property's appraised value. Conventional loans often have lower LTV ratios, and a lower ratio may result in more favorable terms, such as lower interest rates and reduced PMI requirements.
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