Conventional Loans
The most popular mortgage option in America - for both purchase and refinance. Competitive rates, flexible terms, and options for first-time buyers, experienced homeowners, and anyone looking to lower their rate or access their equity.
Last updated: April 2026
Key Facts
Conventional loans are mortgages not backed by a government agency. They follow Fannie Mae and Freddie Mac guidelines, require as little as 3% down, and are available for primary residences, second homes, and investment properties. PMI is required below 20% equity and can be removed once you reach 78% LTV.
What Is a Conventional Loan?
A conventional loan is a mortgage that is not backed by a government agency like FHA or VA. Instead, these loans follow guidelines set by Fannie Mae and Freddie Mac, making them widely available through most lenders.
Conventional loans cover a lot of ground. First home, upgrade, second home, jumbo, investment property, or a straightforward refi - there is a conventional structure for most situations.
For low-to-moderate income borrowers, HomeReady (Fannie Mae) and HomePossible (Freddie Mac) are specialized conventional programs offering reduced mortgage insurance, lower down payments, and flexible income qualification including boarder and rental income. These are some of the most overlooked programs in lending for first-time buyers.
Refinancing is one of the most common uses of conventional loans. A rate-and-term refinance lets you lower your interest rate or change your loan term without taking cash out. A cash-out refinance lets you tap into your home equity for renovations, debt consolidation, or other financial goals - though if you want to keep your current low rate, a HELOC may be a smarter way to access equity. In both cases, conventional refinance loans typically offer highly competitive rates for borrowers with strong credit.
With access to over 90 lenders through Lumin Lending, I can shop your loan across multiple investors to find competitive rates and terms for your specific profile.
Key Benefits
Competitive Interest Rates
Conventional loans consistently offer highly competitive rates, especially for borrowers with strong credit profiles.
Low Down Payment Options
Put down as little as 3% on your home purchase. Programs like HomeReady and HomePossible are specifically designed for low-to-moderate income borrowers with reduced MI and lower down payment requirements.
Down Payment Assistance (DPA)
Multiple DPA programs can help cover your down payment and closing costs, including conventional DPA options that pair with standard loan programs to reduce your out-of-pocket costs.
Flexible Loan Terms
Choose from 15-year, 20-year, or 30-year fixed-rate terms, plus adjustable-rate options to match your financial goals.
No PMI with 20% Down
Avoid private mortgage insurance entirely by putting 20% down, or remove it once you reach 20% equity in your home.
Jumbo Loans for Higher-Value Homes
Buying above conforming loan limits? Jumbo conventional loans offer competitive rates for high-value properties, with flexible guidelines for well-qualified borrowers.
Renovation Financing
Fannie Mae HomeStyle and Choicer Renovation loans let you finance the purchase price plus renovation costs in a single conventional loan - ideal for buyers who want to upgrade a home to their vision.
Refinance to Save
Lower your rate with a rate-and-term refinance, shorten your loan term to build equity faster, or pull cash out for renovations, debt consolidation, or investments.
Who Is This For?
Conventional loans are ideal for borrowers with good to excellent credit who want the most competitive rates and the flexibility to structure their loan around their financial goals.
- First-time homebuyers looking for low down payment options, HomeReady/HomePossible programs, and competitive rates
- Buyers who need down payment help through conventional DPA programs that reduce out-of-pocket costs
- High-value property buyers who need jumbo financing above conforming loan limits
- Renovation buyers using HomeStyle or Choicer Renovation to finance purchase plus improvements
- Move-up buyers upgrading to a larger home or better location
- Refinancers looking to lower their rate, shorten their term, or cash out equity
- Second home or vacation property buyers who want traditional financing
- Borrowers with 20%+ equity who want to eliminate private mortgage insurance
Frequently Asked Questions
What credit score do I need for a conventional loan?
What is the minimum down payment for a conventional loan?
What is PMI and how do I remove it?
Can I use a conventional loan for investment property?
What are conforming loan limits?
Have more questions? Visit our complete FAQ page covering all loan programs, or check the mortgage glossary for definitions of common terms.
Related Loan Programs
FHA Loans
Government-backed loans with 3.5% down and flexible credit requirements.
Learn moreVA Loans
Zero down payment and no PMI for eligible veterans and active-duty service members.
Learn moreHELOC / Home Equity Loans
Access your home equity with a line of credit or fixed-rate home equity loan.
Learn moreLearn More
First-Time Homebuyer Guide 2026
Everything first-time buyers need to know about getting into their first home.
Read articleFHA vs. Conventional Loans
Side-by-side comparison to help you choose the right loan program.
Read articleShould You Refinance in 2026?
How to know if refinancing your conventional loan makes financial sense.
Read articleRates and program availability may vary based on the state or region in which the financed property is located. This is not a credit decision, an offer, or a commitment to lend. Program restrictions apply.
Ready to Get Started?
Let me find you a competitive conventional loan rate from our network of 90+ lenders. Apply online or schedule a call to discuss your options.