Loan Options • Conventional Loan
Conventional home loans
Conventional loans are the most popular way to finance a home, with flexible terms, mortgage insurance you can remove and options for primary homes, second homes and investment properties.
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At a glance
- Down payments as low as 3% for eligible buyers
- PMI can be removed as you build equity
- Primary homes, second homes and rentals
- Fixed and adjustable-rate terms
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Is it right for you?
Who a conventional loan is for
A conventional loan is a mortgage that is not insured or guaranteed by a government agency. Most follow guidelines set by Fannie Mae and Freddie Mac, which is why they are also called conforming loans. Conventional loans are the most widely used mortgage in the country because they fit so many situations: first homes, move-up homes, vacation homes and rentals.
They tend to reward strong credit and steady income with better pricing, and unlike FHA, the mortgage insurance on a conventional loan does not have to last.
Conventional loan requirements in plain English
Credit score
Many lenders look for a score of 620 or higher. Fannie Mae’s automated underwriting now evaluates your whole credit picture rather than relying on a single cutoff, but your score still has a big effect on your rate and your PMI cost. Conventional guidelines generally ask for four years after a Chapter 7 bankruptcy and seven years after a foreclosure.
Debt-to-income ratio
Automated underwriting can approve debt-to-income ratios up to about 50% for strong files. Lower ratios, solid reserves and a larger down payment all help.
Down payment by property type
- Primary residence: as low as 3% for eligible buyers, 5% or more for everyone else
- Second home: typically 10% or more
- Investment property: typically 15% or more for a single-unit purchase
Gift funds from family can be used toward a primary residence or second home.
Loan amount
Conforming loans must fall within the FHFA loan limit for your county. If you need to borrow more, a jumbo loan covers amounts above the limit.
How PMI works on a conventional loan
When you put down less than 20%, the lender requires private mortgage insurance. Your cost depends mainly on your credit score and down payment, and it is usually paid as part of your monthly payment.
Some borrowers choose lender-paid mortgage insurance, which builds the cost into a slightly higher rate instead of a separate monthly charge. A FLO loan officer can compare both side by side.
Conventional pros and cons
Advantages
- As little as 3% down for eligible buyers
- PMI can be removed, and none at 20% down
- No upfront program fee
- Finances primary homes, second homes and investment properties
- Highest baseline loan limit of the three programs
- Wide choice of fixed and adjustable terms
Trade-offs
- Pricing is more sensitive to credit score
- Less flexibility for recent credit events
- Higher down payment needed for second homes and rentals
Compare loan programs
How this loan compares
Switch between programs to see how down payment, credit, mortgage insurance and loan limits stack up side by side.
| Feature | Conventional | FHA | VA |
|---|---|---|---|
| Minimum down payment | 3% for eligible buyers; 5% is common | 3.5% with a 580+ score; 10% with 500 to 579 | 0% with full entitlement |
| Credit profile | Underwriting reviews your full credit picture; higher scores earn better pricing | Designed for credit flexibility; lender minimums apply | No minimum set by the VA; lender minimums apply |
| Mortgage insurance | PMI when you put down less than 20% | Upfront MIP of 1.75% plus annual MIP (0.55% for most 30-year loans) | No monthly mortgage insurance |
| Can mortgage insurance end? | Yes. Request removal at 80% loan-to-value; it ends automatically at 78% | Only after 11 years if you put down 10% or more; otherwise it lasts for the life of the loan unless you refinance | Not applicable |
| Upfront program fee | None | 1.75% upfront MIP (can be financed) | Funding fee of 1.25% to 3.3% (waived for many disabled veterans) |
| 2026 loan limit (1 unit) | $832,750 baseline; up to $1,249,125 in high-cost areas | $541,287 to $1,249,125 depending on county | No VA loan limit with full entitlement |
| Property types | Primary homes, second homes and investment properties | Primary residence, 1 to 4 units | Primary residence, 1 to 4 units |
| Who can apply | Any qualified borrower | Any qualified borrower who will live in the home | Eligible veterans, service members and surviving spouses with a Certificate of Eligibility |
| Gift funds for down payment | Allowed with documentation | Allowed from eligible donors, such as family | Allowed (often not needed with $0 down) |
★ marks the program with the edge on that feature.
*Figures reflect 2026 program guidelines from FHFA, HUD and the Department of Veterans Affairs and are for educational purposes only. This is not a commitment to lend or an offer of specific terms. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability, and lender requirements may be stricter than program minimums. Not all applicants will qualify. FLO Mortgage, Company NMLS #1835856. Equal Housing Opportunity.
FAQ
Conventional loan questions, answered
What is a conventional loan?
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as FHA or the VA. Most conventional loans follow Fannie Mae and Freddie Mac guidelines and are known as conforming loans.
How much do I need to put down on a conventional loan?
Eligible first-time and income-qualified buyers can put down as little as 3% on a primary residence. Other buyers typically put down 5% or more. Second homes usually require 10% and single-unit investment properties usually require 15%.
What credit score do I need for a conventional loan?
Many lenders look for a score of 620 or higher, though automated underwriting now evaluates your full credit profile. Higher scores lead to better interest rates and lower PMI costs.
When can I remove PMI from a conventional loan?
You can request PMI cancellation when your loan balance reaches 80% of the home's original value, and it ends automatically at 78% if your payments are current. A new appraisal may let you remove it sooner if your home has gained value.
What is the conforming loan limit in 2026?
The 2026 conforming loan limit for a one-unit home is $832,750 in most areas and up to $1,249,125 in high-cost areas. Loans above the limit are jumbo loans.
Is a conventional loan better than an FHA loan?
It depends on your credit, down payment and plans. Conventional loans often cost less over time for borrowers with good credit because PMI can be removed, while FHA can be easier to qualify for with lower scores or higher debt. Our comparison tool and loan officers can help you weigh both.
Can I use a conventional loan for a second home or rental property?
Yes. Conventional loans can finance primary residences, second homes and investment properties, while FHA and VA loans are limited to homes you live in.
This is not a commitment to lend. All loans are subject to credit approval, underwriting guidelines, property eligibility and program availability. Lender requirements may be stricter than the program minimums described here. Not all applicants will qualify. Figures reflect 2026 program guidelines and may change without notice. FLO Mortgage is licensed in Florida, Georgia, Michigan, North Carolina, Tennessee and Texas. Company NMLS #1835856. Equal Housing Opportunity. Licensing & Disclosures.
Local, licensed help
Talk a conventional loan through with a FLO loan officer
Every FLO Mortgage loan officer can walk you through this program, run the numbers for your situation and compare it with your other options. Have questions? Call our main office at (386) 882-9980.
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