Conventional Loans
Conventional loans are one of the most common loan types for homebuyers and homeowners. For qualified borrowers, a conventional mortgage may offer competitive pricing, flexible down payment options, and the ability to remove private mortgage insurance once enough equity is reached.
What Is a Conventional Loan?
Flexible mortgage options for buying or refinancing a primary home, second home, or investment property
A conventional loan is a mortgage that is not backed by a government agency such as FHA, VA, or USDA. Many conventional loans are conforming loans, which means they meet loan limits and underwriting guidelines used by Fannie Mae and Freddie Mac. Conventional loans can be used for a variety of occupancy types, including primary residences, second homes, and investment properties, depending on borrower eligibility and program guidelines.
What Are The Benefits of a Conventional Mortgage?
- Flexible down payment options. In some cases, as little as 3%.
- Private mortgage insurance, or PMI, may be removable once sufficient equity is reached.
- Loan options may be available for primary homes, second homes, and investment properties.
- Borrowers with stronger credit and larger down payments may qualify for more favorable pricing.
- Conventional loans may offer flexible term options, including fixed-rate and adjustable-rate mortgages.
Conventional Loan Requirements
Conventional loan eligibility depends on several factors, including credit history, income, debt-to-income ratio, assets, property type, occupancy, loan amount, and current program guidelines. Requirements can vary by borrower profile and loan scenario, so it is important to review your options with a mortgage professional.
Down Payment
Some conventional loan programs permit down payments as low as 3% for eligible borrowers purchasing a primary residence. Minimum down payment requirements vary based on the loan program, occupancy type, property type, borrower qualifications, and applicable investor guidelines. Second homes and investment properties generally require larger down payments.
When a borrower makes a down payment of less than 20%, private mortgage insurance may be required, depending on the loan program and structure.
Private Mortgage Insurance (PMI)
Some conventional loans require private mortgage insurance (PMI), which helps protect the lender and may increase the monthly payment. Depending on the loan and program requirements, PMI may be removed when certain equity or loan balance milestones are met.
Loan Limits
Conforming conventional loans are subject to annual loan limits. For 2026, the baseline conforming loan limit for a one-unit property in most of the United States is $832,750. Higher limits may apply in certain high-cost areas. Loan limits vary by county and property type.
When a Conventional Loan May Be a Good Fit
A conventional loan may be worth considering if you have steady income, established credit, and enough savings for your down payment and closing costs. It may also be a strong option if you want to buy a second home or investment property, avoid upfront government mortgage insurance premiums, or remove PMI once you build enough equity.
Conventional Loan vs. FHA Loan
Conventional and FHA loans can both help buyers finance a home, but they work differently. FHA loans are government-insured and may be helpful for some borrowers with lower credit scores or smaller down payments. Conventional loans are not government-insured and may offer advantages for borrowers with stronger credit, larger down payments, or scenarios involving second homes or investment properties. The right choice depends on your credit profile, income, down payment, property type, and long-term goals.
How Granite Bank Can Help
Granite Bank helps borrowers compare mortgage options and understand what may fit their goals. Whether you are buying your first home, moving up, refinancing, or financing a second home or investment property, our loan officers can walk you through your options and explain the details in plain language.
Ready to explore your options? Connect with a Granite Bank loan officer to learn whether a conventional loan may be a good fit for you.
FAQ: Conventional Loans
Do conventional loans require 20% down?
No, however PMI is generally required when the down payment is less than 20%.
Can PMI be removed from a conventional loan?
In many cases, yes. Depending on the loan and program requirements, PMI may be removed once certain equity or loan balance milestones are reached.
What is the conventional loan limit for 2026?
For most one-unit properties in the United States, the 2026 baseline conforming loan limit is $832,750. Higher limits may apply in certain high-cost counties and for multi-unit properties.
