Conventional Loans

A conventional loan is one of the most common types of mortgages available to homebuyers. Unlike FHA, VA, or USDA loans, a conventional loan is not insured or guaranteed by the federal government. Instead, it’s offered by private lenders—such as banks, credit unions, and mortgage companies—and typically follows the standards set by two major government-sponsored enterprises (GSEs): Fannie Mae and Freddie Mac.

Types of Conventional Loans

Conforming Loans
- Meet Fannie Mae and Freddie Mac’s guidelines
- Must be at or below the conforming loan limits set each year by the Federal Housing Finance Agency (FHFA)
- Require minimum credit score, debt-to-income ratio, and down payment standards
Non-Conforming Loans
- Do not meet GSE guidelines
- Common example: Jumbo Loans, which exceed the conforming loan limit and are used for higher-priced homes
- May have stricter qualification requirements, such as higher credit scores or larger down payments

2025 Conforming Loan Limits (Example – adjust for your county)

Baseline limit for most areas: $805,500 for a single-family home
High-cost areas: Up to $1,209,750 for a single-family home
Loan limits vary by county and property type, so it’s important to check your specific area.

Benefits of Conventional Loans

Flexible terms: fixed-rate or adjustable-rate options
Can be used for primary residences, second homes, or investment properties
As little as 3% down payment for qualified borrowers
No upfront mortgage insurance premium (unlike FHA loans)
Private mortgage insurance (PMI) can be canceled once you reach 20% equity

Is a Conventional Loan Right for You?

Conventional loans can be an excellent choice for borrowers with solid credit and stable income, especially those who want flexible property options and the ability to remove PMI over time. The best way to know is to compare your options with a mortgage professional.