Conventional loans are the backbone of today’s mortgage market. This guide unpacks how they work: down payment options, mortgage insurance, credit expectations, and when a Conventional loan can be your most flexible, cost-effective choice.
Conventional loans are designed for a broad range of buyers and homeowners. They reward strong, stable finances and can be very flexible across property types and long-term plans.
They may be a strong fit if you:
Conventional may be less ideal if credit is heavily bruised, income is hard to document, or cash to close is extremely tight. In those cases, we’ll often model FHA, down payment assistance, or other programs alongside Conventional so you can compare.
Down payment on Conventional loans
Mortgage insurance (PMI)
Closing costs & seller credits
There’s no one-size-fits-all rule like “always put 20% down.” We’ll look at how different down payment levels affect payment, cash to close, and long-term flexibility.
Conventional guidelines tend to reward higher credit scores with better pricing. The automated underwriting systems look at your full picture: scores, depth of history, recent behavior, and overall stability. Cleaning up small items and paying down revolving balances can sometimes move the needle on terms.
Lenders look closely at your DTI—how much of your gross monthly income goes toward debts and your new housing payment. The target range varies by scenario, but generally, lower DTIs and stronger reserves strengthen your approval and can open more options.
You don’t need to memorize any of the formulas. The big idea: steady income, manageable debts, and a healthy credit pattern usually unlock better Conventional choices.
Conventional loans can support a wide range of property and occupancy types, including:
Occupancy type (primary, second home, or investment) affects minimum down payment, reserves, and pricing. We’ll walk through how each option impacts your plan so the property you pick and the loan structure work together.
Conventional loans can be an excellent fit when you want flexibility and long-term options:
FHA or VA may be a better fit if:
When we build your plan, we’ll usually show Conventional side-by-side with at least one other program, so you’re not guessing which is “best”—you’ll see it in the numbers.
Imagine a family who already owns a home and is moving up to a property that better fits their current season of life. They have strong credit, steady income, and equity they can roll into the next purchase—but they’d rather keep some savings as a cushion.
In a case like this, we might compare:
Sometimes a slightly higher payment is worth it to keep more cash in the bank. Other times, the math favors a larger down payment. The key is looking at the next 5–7 years, not just month one.
You don’t need a perfect file to start. But having these items ready helps us move quickly and gives you clear Conventional numbers:
Want to pressure-test the payment before we talk? You can use my mortgage payment calculator to rough in estimated payments at different price points, taxes, insurance levels, and rate scenarios. It’s for estimates only — we’ll still build your final Conventional plan using live pricing and your full approval file.
The goal isn’t just “get approved.” It’s to structure the Conventional loan around your life— your family, your cash flow, and your long-term plans.
As you compare Conventional options (and Conventional vs. other programs), these questions help cut through the noise:
If you can answer those clearly, you’re ahead of most buyers and making decisions with your eyes open.