What is the minimum down payment for a conventional loan?

The minimum is 3% for qualifying first-time buyers through programs like Fannie Mae HomeReady or Freddie Mac Home Possible. Standard conventional loans typically require 5% down. Putting 20% down eliminates the need for PMI.

When can I remove PMI from a conventional loan?

PMI automatically cancels when your loan balance reaches 78% of the original home value. You can request cancellation at 80% LTV. You can also get a new appraisal to prove your home has appreciated enough to reach 80% LTV sooner.

What credit score do I need for the best conventional rates?

A 740 or higher credit score typically qualifies for the best conventional rates. Each 20-point increase above 620 can reduce your rate and PMI costs. Scores between 620 and 680 will qualify but at higher rates.

Can I use a conventional loan for an investment property?

Yes, conventional loans can finance primary residences, second homes, and investment properties. Investment property loans typically require 15-25% down and carry slightly higher rates.

Conventional Loans: Best Rates for Strong Borrowers

Conventional mortgages offer the lowest long-term costs for borrowers with good credit and a solid down payment. PMI is removable once you reach 20% equity — unlike FHA's permanent MIP.

What Is a Conventional Loan?

A conventional loan is any mortgage not backed by a government agency (FHA, VA, or USDA). Most conventional loans conform to guidelines set by Fannie Mae and Freddie Mac, which buy and guarantee these loans on the secondary market. Because there is no government insurance, conventional loans typically require higher credit scores and down payments — but offer better terms for those who qualify.

Conventional Loan Features

Down Payment Options

As low as 3% for first-time buyers (Fannie Mae HomeReady, Freddie Mac Home Possible). Standard minimum: 5%. Put 20% down to avoid PMI entirely.

Removable PMI

Unlike FHA's permanent MIP, conventional PMI automatically drops at 78% LTV and can be requested off at 80% LTV. This makes conventional cheaper long-term for many borrowers.

Credit Requirements

Minimum 620, but best rates require 740+. Each 20-point credit score increase can meaningfully reduce your rate and PMI cost.

Loan Limits

2024 conforming limit: $766,550 (most areas). High-cost areas (much of California): up to $1,149,825. Above these limits, you need a jumbo loan.

Property Flexibility

Can finance primary residences, second homes, and investment properties. Less restrictive property condition requirements than FHA — no strict appraisal standards.

Loan Terms

Available in fixed and adjustable rates. Terms from 10 to 30 years. Compare 15-year vs. 30-year to find your fit.

Conventional Loan Programs

Popular Conventional Options

Fannie Mae HomeReady: 3% down for borrowers at or below 80% area median income. Reduced PMI rates.
Freddie Mac Home Possible: 3% down for low-to-moderate income borrowers. Flexible income sources allowed.
Standard Conforming: 5%–20% down, 620+ credit. The most common conventional loan type.
High-Balance Conforming: For loans between the standard and high-cost-area limits.

When to Choose Conventional Over FHA

If your credit score is 700+ and you can put at least 10% down, a conventional loan is almost always cheaper over the life of the loan. The ability to remove PMI at 80% LTV (vs. FHA's permanent MIP) saves thousands. See our detailed FHA vs. Conventional comparison for a full breakdown.

Check today's 30-year rates or use our mortgage calculator to estimate your payment.