Conventional Loans
A conventional loan is a mortgage that conforms to Fannie Mae and Freddie Mac guidelines and is not government-insured, and its single biggest edge over FHA is simple: its mortgage insurance comes off once you reach about 20% equity, while FHA insurance usually stays for the life of the loan. A veteran-owned broker shops your file across a wholesale lender network so the version of conventional you get is the one that actually fits your credit, down payment, and goals.
Conforming to Fannie and Freddie, with mortgage insurance you can remove
A conventional loan is any mortgage that is not backed by a government agency like the VA, FHA, or USDA. The most common conventional loans are conforming loans, meaning they meet the underwriting and loan-size rules set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy mortgages on the secondary market. Because they are not insured by the government, conventional loans are underwritten to those agency guidelines instead, and lenders can add their own credit overlays on top.
The defining advantage is what happens to your mortgage insurance over time. If you put down less than 20%, a conventional loan carries private mortgage insurance (PMI), but that PMI is removable: you can request cancellation once your balance reaches 80% of the original value, and by law it must terminate automatically at 78% of the original value when your payments are current. That is the structural difference from an FHA loan, where the mortgage insurance premium (MIP) typically lasts the life of the loan unless you put 10% or more down or refinance out of FHA entirely. Over the years you own the home, that single difference can be the deciding factor.
As a veteran-owned broker, Home Loans Inc shops your conventional file across a wholesale lender network on one application rather than pitching a single bank’s pricing. That matters on conventional loans specifically, because PMI cost and approval both swing with credit and lender overlays, so the same borrower can get a meaningfully better structure from one investor than another.
Down payment options, from 3% to 20%
The biggest myth about conventional loans is that they require 20% down. They do not. The right down payment is a trade-off between cash today and how fast you reach the 20% equity mark where PMI comes off. Here are the real tiers we structure most often.
3% down (first-time and low-down programs)
Conventional 97, plus Fannie Mae HomeReady and Freddie Mac Home Possible, allow as little as 3% down for qualifying buyers. HomeReady and Home Possible are built for borrowers at or under area income limits and can also reduce PMI cost. Great for a first-time buyer with strong credit but limited cash.
5% down
The standard low-down conventional option for buyers who do not fit the 3% programs. You carry PMI, but you reach the 20% equity cancellation point faster than at 3%, and a 5% file often prices better.
10% down
A middle path with lower PMI, a smaller loan balance, and a quicker route to PMI removal. Common for move-up buyers using equity from a prior home.
20% down
No PMI at all from day one. If you have the cash, 20% down is the cleanest conventional structure and keeps your monthly payment lowest, though it is not required to get the loan.
Piggyback structures
In some cases an 80/10/10 split (a first mortgage plus a second) can avoid PMI with less than 20% down. We model whether it beats simply paying PMI for your situation.
Gift funds and reserves
Conventional rules allow gift funds for down payment in many scenarios and have clear reserve requirements. We map exactly what counts before you commit cash.
Buying your first home? Our first-time buyer guide walks through how these down payment tiers pair with closing costs and assistance.
We shop conventional loans across a wholesale lender network.
Conventional PMI comes off; FHA MIP usually does not
This is the section worth reading twice, because it is the dollars-over-time reason many qualified buyers choose conventional over FHA. Both loans let you buy with a low down payment, and both charge mortgage insurance when you do. The difference is how long that insurance sticks around.
On a conventional loan, PMI is temporary. You can ask your servicer to cancel it once your loan balance reaches 80% of the home’s original value, and federal law requires automatic termination at 78% of the original value as long as you are current. Pay down principal, or have the home reappraise higher after improvements, and you can shed PMI sooner. On an FHA loan, the annual MIP generally lasts the entire loan term if you put down less than 10%; only a 10%-or-more down payment ends it after 11 years, and the most common way out otherwise is to refinance into a conventional loan once you have equity.
| Feature | Conventional PMI | FHA MIP |
|---|---|---|
| Upfront insurance fee | None | Yes, an upfront premium financed into the loan |
| How long it lasts | Removable at 80% LTV by request; auto-terminates at 78% of original value | Usually the life of the loan if under 10% down; ends after 11 years only with 10%+ down |
| Priced on credit | Yes, stronger credit means lower PMI | No, the same MIP regardless of credit score |
| Way out | Reach 20% equity | Refinance into a conventional loan |
The takeaway is not that conventional always wins, it is that conventional rewards equity and strong credit, while FHA is more forgiving on credit and debt. We run both side by side on your real numbers so the choice is obvious instead of a guess.
Conforming limits, high-balance, and where jumbo begins
Conventional conforming loans have a maximum size set each year by the Federal Housing Finance Agency. For 2026, the baseline conforming limit for a one-unit home is $832,750 across most of the country, and in designated high-cost areas the ceiling rises to $1,249,125. Two-to-four-unit properties have higher limits.
Conforming
At or under the FHFA limit for your county and unit count. This is the standard conventional loan that Fannie Mae or Freddie Mac will buy, and it generally offers the most competitive pricing.
High-balance conforming
In higher-cost counties, the limit is raised above the national baseline. These high-balance loans are still conforming but priced slightly differently than a standard conforming loan.
Jumbo
Above the conforming ceiling, a loan becomes a jumbo, which is conventional but not conforming. Jumbo loans are held to stricter credit, reserve, and down payment standards because no agency backs them. We place these across investors who actually want jumbo files.
Buying near the line matters because the same purchase price can be a conforming loan with one down payment and a jumbo with another. We check your county limit and structure the file on the right side of it whenever it benefits you.
Credit and DTI expectations on a conventional loan
Conventional loans generally expect a stronger credit profile than FHA. FHA was designed to be the more forgiving program on credit and debt, so a conventional approval typically rewards higher credit scores, a clean recent history, and manageable debt. The exact thresholds vary by lender overlay, down payment, and the automated underwriting decision, which is why one investor approves a file another declines on identical numbers.
Credit score
Conventional pricing improves sharply as scores rise, and your PMI cost is tied directly to your score, unlike FHA. A higher score does double duty here, lowering both the loan pricing and the insurance.
Debt-to-income (DTI)
Your total monthly debts versus gross income drive approval. Automated underwriting can allow higher DTIs with strong compensating factors like reserves or a larger down payment. We structure the file to present those strengths.
Down payment and reserves
A larger down payment and documented reserves can offset a tighter credit or DTI profile. We map which lever to pull so you are not over-contributing cash you do not need to.
Waiting periods
Conventional has its own seasoning periods after a bankruptcy, foreclosure, or short sale that often differ from FHA. We tell you exactly where you stand and when conventional opens back up.
Property and occupancy
How you will use the home, primary, second home, or investment, changes pricing and the minimum down payment. More on that below.
Self-employed and complex income
Conventional documents income to agency standards. We know how to present self-employed, bonus, and rental income so it counts the way it should.
When each loan type actually wins
There is no single best loan, only the best loan for your file. Here is the honest breakdown of when each one is the right call, so you are choosing on substance rather than a slogan.
| Loan type | Wins when | Watch out for |
|---|---|---|
| Conventional | You have good-to-strong credit, want PMI you can remove, plan to build equity, or want flexibility on second homes and investment property. | Tighter credit and DTI standards than FHA; PMI applies under 20% down until you reach the equity threshold. |
| FHA | Your credit or debt load is tighter, or your down payment is very small and your score is modest. FHA is the more forgiving program on credit. | Mortgage insurance usually for the life of the loan; the common exit is refinancing into conventional. See FHA loans. |
| VA | You are an eligible veteran or service member. Zero down, no monthly mortgage insurance, often the strongest option when you qualify. | Eligibility required; a one-time funding fee unless exempt. See VA loans. |
If you are eligible for VA, that is almost always worth comparing first. If not, the real contest for most buyers is conventional versus FHA, and it comes down to your credit, your down payment, and how long you plan to keep the loan. We put all three on the table.
Fixed vs ARM, and how occupancy changes the deal
Two structural choices shape a conventional loan as much as your down payment: the rate type, and how you will use the property. Both are decided up front and both move your cost.
Fixed-rate
Your principal-and-interest payment stays the same for the full term. The simplest, most predictable structure, and the right default for most buyers who plan to stay put.
Predictable for the long haulAdjustable-rate (ARM)
A fixed introductory period, then periodic adjustments tied to an index. Can fit a buyer with a shorter time horizon, but we walk through the adjustment caps and worst-case payment before you choose it.
Know the caps firstPrimary residence
The home you live in gets the best conventional pricing and the lowest minimum down payment, including the 3% first-time programs.
Best pricing tierSecond home and investment
Second homes and investment properties carry higher minimum down payments and pricing adjustments because they are higher risk to the lender. We price these accurately so the numbers are real before you offer.
Priced for the riskWho conventional loans fit best
A conventional loan tends to be the strongest choice when a few things are true for you. If most of these describe your situation, conventional is very likely your loan, and we will confirm it against your real file.
You have good credit
The stronger your score, the more conventional rewards you, on both pricing and PMI cost. This is where conventional pulls ahead of FHA.
You want to drop PMI
You plan to reach 20% equity through payments, appreciation, or a larger down payment, and want mortgage insurance gone rather than permanent.
You want flexibility
You may want a second home or an investment property, a wider range of property types, or a jumbo above the conforming limit. Conventional covers all of it.
You are a first-time buyer with strong credit
The 3% down HomeReady, Home Possible, and Conventional 97 programs let you buy with limited cash while keeping the removable-PMI advantage.
You are refinancing to remove FHA MIP
If you have built equity on an FHA loan, refinancing into conventional is the standard way to shed mortgage insurance for good. See our refinance options.
You value choice in lenders
Because we are a broker, we shop your conventional file across many investors instead of one bank, which matters most where overlays and PMI pricing differ.
Talk to a conventional loan specialist
Home Loans Inc: Jason Sharon, Mortgage Broker
2557 Ashley Phosphate Rd, North Charleston, SC 29418
How a conventional loan goes from application to closing
1. Real-numbers pre-approval
We review credit, income, and assets, run automated underwriting, and shop your file across wholesale lenders to find the conventional structure and PMI that fit you best.
Know your real number2. Pick the structure
We settle down payment tier, fixed vs ARM, and conforming vs jumbo, then issue a pre-approval strong enough to compete on your offer.
Built to win the offer3. Appraisal and underwriting
We order the appraisal, clear conditions, and manage the file to a clean approval, keeping you ahead of every document request.
We run the file4. Close, then optimize later
You close, and as equity builds we help you cancel PMI or refinance when it makes sense. The relationship does not end at the closing table.
Refinance options →Why borrowers choose Home Loans Inc for conventional financing
Jason Sharon founded Home Loans Inc in 2018 after serving as a nuclear engineer in the U.S. Navy, a background that shows up as precision on every loan file. He holds NMLS #1281448 (company NMLS #1728740) and has spent 8+ years originating loans, including a deep bench of conventional purchases and refinances across primary homes, second homes, and investment property.
Because we are a veteran-owned broker and not a single bank, your conventional file is shopped across a wholesale lender network on one application. That is the difference that lowers PMI and wins approvals other lenders decline. Borrowers have left 430+ reviews at a 5.0 rating, and we are BBB A+ accredited. You will work with a veteran-owned broker, not a call center.
Conventional loans, frequently asked
Rated 5.0 by the families we serve.
Jason knows his stuff! We highly recommend him for your mortgage needs! He responds timely, provides information you didn't know you needed, puts the client needs first, and makes common sense adjustments throughout the entire process.
Jason and his team did an amazing job for me. They communicated often and made the entire mortgage process smooth and efficient. I can genuinely say that they are honest, trustworthy and strive to provide the best service possible to their clients.
Jason has been awesome since the beginning. He has been communicative, professional, KNOWLEDGEABLE, and honest. I am very happy with all my services so far, and I recommend UWM!