Conventional home loans

What is a conventional loan?

A conventional loan is a mortgage that isn't insured or guaranteed by a government agency. Most conform to Fannie Mae and Freddie Mac guidelines, which keeps rates competitive and options broad. Conventional financing is available for primary residences, second homes, and investment properties, with fixed-rate and adjustable-rate terms.

A good fit if you

• Have established credit and steady income
• Want to buy a primary home, vacation home, or investment property
• Can put down as little as 3% (first-time buyer programs) or want to avoid mortgage insurance with 20% down
• Want to refinance for a better rate or term, or take cash out of your equity

Key features

• Fixed-rate terms from 10 to 30 years, plus adjustable-rate options
• Private mortgage insurance (PMI) can be removed once you reach sufficient equity
• Rate-and-term and cash-out refinance options
• Financing for single-family homes, condos, townhomes, and 2–4 unit properties

Things to know

• Qualification depends on credit score, debt-to-income ratio, and down payment
• Loan amounts above the conforming limit fall into jumbo territory with different requirements
• PMI applies with less than 20% down until equity thresholds are met