Purchase & refinance
Conventional mortgage loans
- As little as 3% down
- Mortgage insurance drops off at 20% equity
- Works for primary, second home, or rental
What is a conventional loan?
A conventional loan is a mortgage that is not insured by a federal agency and follows Fannie Mae or Freddie Mac guidelines. It typically requires a 620 or higher credit score, as little as 3% down, and private mortgage insurance until you reach 20% equity. It is the most common loan for buyers with solid credit and steady income.
Use it to buy
- 3% down for first-time buyers or with HomeReady or Home Possible, 5% otherwise
- PMI cancels on its own at 22% equity
- Second homes at 10% down, rentals at 15%
The catch: Pricing gets noticeably worse below 680 credit.
Use it to refinance
- Refinance out of FHA to drop mortgage insurance
- Many files qualify for an appraisal waiver
- Cash-out up to 80% of your home’s value
The catch: Cash-out requires 12 months of ownership and 620+ credit.
Ways to set it up
Choose these when you lock your rate. You’ll see the cost of each option in dollars.
What you need to qualify
| Requirement | Guideline | Notes |
|---|---|---|
| Minimum credit score | 620 | 680+ gets meaningfully better pricing |
| Down payment | 3% – 5% | 3% with HomeReady or Home Possible if your income is within the program limit (80% of area median), or 3% as a first-time buyer; 5% otherwise |
| Debt-to-income (DTI) | Up to 45% | Up to 50% with automated approval and strong compensating factors |
| Loan limit | $832,750 | 2026 baseline conforming limit; higher in designated high-cost counties |
| Mortgage insurance | PMI below 20% down | Removable at 20% equity on request; cancels automatically at 22% |
| Occupancy | Primary, second home, investment | Second homes need 10% down; investment properties 15–25% |
Check the basics
A quick starting point, not an approval. Three questions, no credit check. Your full application confirms income, assets, and more.
Answer the questions to see your result.
An estimate based on typical guidelines. Not a pre-approval or commitment to lend.
Pros and cons
Pros
- Mortgage insurance ends at 20% equity, with no refinance needed
- Works for primary homes, second homes, and rentals
- Fewer property condition rules than FHA or VA
Cons
- Rates and PMI rise quickly below 680 credit
- Stricter debt-to-income limits than FHA
- Loan size capped at the conforming limit
Common questions
What credit score do I need for a conventional loan?
Most lenders require a minimum FICO score of 620. Scores of 680 and above qualify for better pricing.
How much do I need to put down?
As little as 3% for first-time buyers, or with Fannie Mae HomeReady or Freddie Mac Home Possible for borrowers within the income limit (80% of area median), and 5% for most other buyers. Putting 20% down avoids private mortgage insurance.
What is PMI and when does it go away?
Private mortgage insurance protects the lender when you put down less than 20%. You can request removal at 20% equity, and it cancels automatically at 22% based on the original amortization schedule.
Conventional vs. FHA: which is cheaper?
With a credit score above roughly 700, conventional is usually cheaper because PMI is lower and cancelable. FHA tends to cost less for scores in the 580–680 range or when a 3.5% down payment is needed.
What is the maximum DTI for a conventional loan?
Fannie Mae and Freddie Mac allow up to 45% debt-to-income in most cases and up to 50% with an automated approval and strong compensating factors like reserves or high credit.
Can I use a conventional loan for a rental or second home?
Yes. Second homes require at least 10% down, and investment properties generally need 15% down for a single unit or 25% for 2–4 units, with slightly higher rates.
Can I use gift funds for my down payment?
Yes. Gifts from family are allowed for the entire down payment on a primary residence, documented with a gift letter and proof of transfer.
How long does a conventional loan take to close?
Timing depends mostly on the appraisal and how quickly documents are returned.
What is the conforming loan limit for 2026?
The baseline one-unit limit is $832,750 for 2026, with higher limits in designated high-cost counties. Anything above your county limit is a jumbo loan.
Keep exploring
See what a conventional loan costs for you.
Enter a few details to see your rate, points, and monthly payment. No credit check. No phone number.
Disclosures
- Fannie Mae and Freddie Mac are not affiliated with and do not endorse Lendid Direct.
- PMI cancellation is subject to the Homeowners Protection Act and servicer requirements.
- Rates, terms, and programs are subject to change without notice and to credit and property approval. Not all applicants will qualify.
- Lendid Loans, LLC is a licensed mortgage broker in Texas, Florida, Colorado, and Oklahoma. All loans originated through Lendid Direct are brokered by Lendid Loans, LLC. This is not a commitment to lend. Programs, rates, terms, and conditions are subject to change without notice. All loans subject to credit approval. NMLS# 1470572.
- Equal Housing Opportunity.