What Is a Conventional Home Purchase Loan? [Your Complete Guide]
Thinking About Buying a Home? Start with a Conventional Loan.
For most homebuyers—especially those with good credit and stable income—conventional loans are the #1 choice. Backed by private lenders (not the government), they offer competitive rates, low fees, and flexible options. But what exactly is a conventional home loan—and how do you qualify?
Let’s break it down.
What Is a Conventional Loan?
A conventional home purchase loan is any mortgage that’s not backed by a government agency like FHA or VA. Instead, it follows guidelines set by Fannie Mae and Freddie Mac, making it a solid, dependable loan type for primary residences, second homes, and investment properties.
These are often referred to as “conforming loans” because they conform to certain loan limits and borrower standards. In higher-priced markets, you might need a high-balance conventional loan, which we’ll also help you navigate.
Why Buyers Choose Conventional Loans
Here’s why millions of buyers go conventional every year:
- Low down payment options (as low as 3% down for first-time buyers)
- No upfront mortgage insurance premiums
- PMI (private mortgage insurance) can be removed once you reach 20% equity
- Flexible property types—single-family, condos, 2–4 units, second homes
- Competitive fixed or adjustable rates
For many buyers, it’s the best blend of affordability, flexibility, and long-term wealth-building.
Who Qualifies for a Conventional Loan?
To qualify, most lenders will look for:
- 620+ credit score
- Debt-to-income (DTI) under 45%
- Stable job or income history
- A clean credit history (no recent bankruptcies, major delinquencies)
- Proof of down payment funds (can come from savings, gifts, or grants)
Not sure if you qualify? Click here to schedule a free pre-approval consultation.
What’s the Difference Between Conventional and FHA?
- FHA loans are great for lower credit scores and smaller down payments but come with lifetime mortgage insurance.
- Conventional loans can be cheaper long-term if your credit and income are solid, and the PMI can go away.
Check out our guide: FHA vs. Conventional: Which Loan Is Right for You?
Related Programs You Might Consider
If you’re not quite a match for a conventional loan, don’t worry—we have alternatives:
- Bank Statement Loans for Self-Employed Borrowers
- Down Payment Assistance Loans
- VA Loans (for Veterans)
Final Thoughts: Is a Conventional Home Purchase Loan Right for You?
If you’re not quite a match for a conventional loan, don’t worry—we have alternatives:
- Bank Statement Loans for Self-Employed Borrowers
- Down Payment Assistance Loans
- VA Loans (for Veterans)
Ready to Take Your First Step?
Skip the guesswork. Take our quick Discovery Quiz to uncover your top financial priorities, so we can guide you toward the wealth-building strategies that fit your life.
- Takes just 5 minutes
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Buying a home soon? Complete our short form and we’ll connect you with the best loan options for your target property and financial situation—fast.
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