How much down payment is needed for a conventional loan?

Some conventional loans allow down payments as low as 3%, though 5% to 20% is more common depending on the borrower’s profile and property type.

Are conventional loans only for primary residences?

No. Conventional loans can be used for primary residences, second homes, and investment properties, giving borrowers broad flexibility.

Can I cancel PMI on a conventional loan?

Yes. Unlike FHA loans, private mortgage insurance (PMI) on conventional loans can typically be removed once you reach 20% equity.

Conventional Mortgage Basics

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Conventional Loan FAQs

Conventional Loans

Q: What is a conventional loan?

A conventional loan is a mortgage that isn’t backed by a government agency like the FHA or VA. It typically requires higher credit scores and offers more flexibility in terms and structure.

Conventional loans remain the most popular path to homeownership for borrowers with stable income, good credit, and flexible goals. The JD.Mortgage team at PRMG provides access to competitive fixed and adjustable-rate conventional loan programs in 49 states—structured with precision and tailored to your financial picture.

What Is a Conventional Loan?

A conventional loan is any mortgage that isn’t backed by the federal government. Instead, it meets guidelines set by Fannie Mae and Freddie Mac, and is offered through private lenders. These loans are ideal for buyers with solid credit, stable income, and at least a 3%–5% down payment. They also work well for borrowers looking to avoid upfront mortgage insurance fees associated with government-backed loans. Learn how our process supports you from application to closing.

Types of Conventional Loans

Conventional financing isn’t one-size-fits-all. Several loan types fall under the conventional umbrella, including:

Conforming Loans – Loans within the FHFA limits, currently $806,500 in most areas for 2025.
High-Balance Loans – For markets with higher housing costs, these exceed standard conforming limits but still follow Fannie/Freddie rules.
Fixed-Rate Mortgages – Consistent monthly payments for terms of 10, 15, 20, or 30 years.
Adjustable-Rate Mortgages (ARMs) – Lower initial rates with adjustments after 5, 7, or 10 years.

Use our calculator to see which term and payment fits your budget best.

Who Qualifies for a Conventional Loan?

Conventional loans are often associated with higher credit score requirements, but they’re more accessible than many realize. You may qualify if you:

Have a credit score of 620 or higher
Can verify steady income and employment
Can afford at least a 3%–5% down payment
Have a debt-to-income (DTI) ratio under 45%

There’s also special eligibility for first-time homebuyers with low down payment programs available. Start your homeownership journey with expert guidance.

Conventional vs FHA: Which Is Better?

FHA loans are known for their flexible credit standards, but conventional loans may offer long-term savings. Here’s how they compare:

Mortgage Insurance: FHA requires it regardless of down payment; conventional loans can waive it with 20% down.
Loan Limits: Both have limits, but conventional loans may offer more flexibility in high-cost areas.
Property Standards: FHA appraisals can be stricter; conventional allows more flexibility on property condition.

Explore FHA loans here if you’re not sure which path is right for you.

Benefits of a Conventional Loan

Conventional loans offer key advantages for both homebuyers and investors:

No upfront mortgage insurance premium
Loan terms from 10–30 years
Options for second homes and investment properties
Can be used for purchases, refinances, or renovations

Looking to refinance? Conventional loans are often the ideal choice for lowering your rate or removing PMI.

How Much Can You Borrow?

As of 2025, the standard conforming loan limit is $806,500 in most areas, with higher limits in certain high-cost markets. Anything above this may require a jumbo loan. Learn about jumbo loan options if you’re shopping in a higher price range.

Down Payments and Mortgage Insurance

While a 20% down payment helps you avoid private mortgage insurance (PMI), many borrowers put down far less. With as little as 3% down for qualified buyers, PMI is typically required—but it can be canceled once you reach 20% equity. Explore DPA programs if you need help with your down payment.

Is a Conventional Loan Right for You?

If you have solid credit, reliable income, and are looking for long-term value, a conventional loan may be your best fit. But it’s not the only option. The JD.Mortgage team offers solutions for all buyer profiles—including those denied by other lenders. Let’s review your scenario together and find the best path forward.

Explore All Your Mortgage Options

Conventional loans are just one of many programs we offer. Whether you’re exploring government-backed solutions or more flexible lending alternatives, we’re here to help. Learn more about:

Ready to take the next step? Click here to start your personalized loan review.

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J.D. Peck