By Ken Clark Jr. ยท Certified Mortgage Advisor & Branch Manager ยท NMLS #225375 Last updated:
Ken Clark Jr.
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Conventional Loans

โœ“ Last verified against available program guidelines: May 17, 2026

The default home loan in America. Backed by Fannie Mae or Freddie Mac, available with as little as 3% down through HomeReady and Home Possible, and structured so mortgage insurance drops automatically at 78% LTV. We close conventional loans every week for first-time buyers, move-up buyers, refinance clients, and investors.

Conventional Programs

Every conventional program we offer.

Standard Conventional (Fannie / Freddie)

5% down minimum on a primary residence. The most common option for buyers who don't need the lower-down or alternative-credit features of FHA. Generally favors borrowers with 700+ credit scores and stable income.

HomeReady (Fannie Mae) 3% Down

3% minimum down for income-qualified first-time buyers. Designed for borrowers under 80% of area median income. Reduced mortgage insurance, allows non-borrower household income for qualification, and accepts boarder income.

Home Possible (Freddie Mac) 3% Down

Freddie Mac's answer to HomeReady. 3% down for very low to moderate income borrowers. Flexible source-of-funds rules (gifts, grants, employer assistance, DPA). Often the best fit when a state DPA program is layered on top.

Conventional Cash-Out Refinance

Up to 80% LTV cash-out for primary residences. Tap equity for renovation, debt consolidation, investment, or any qualified purpose. Investor cash-out caps lower. Available 6 months after purchase under most guidelines.

Conventional Rate-and-Term Refinance

Drop your rate, shorten your term, or remove mortgage insurance. When rates dip, this is the cleanest refi path for borrowers already in conventional or FHA loans with 20%+ equity.

HomeStyle Renovation

Conventional 203k equivalent. Roll renovation costs into the purchase loan. Up to 75% of the as-completed value or purchase price + improvements. Cosmetic, structural, and even luxury improvements (pool, addition).

Conventional Construction-to-Permanent

One-time-close construction. Lock your permanent mortgage rate during construction, single closing, no need to requalify when the home is done.

Conventional + DPA Stacks

Stack DPA on a 3% conventional and your effective down can be near zero. CalHFA MyHome, GSFA Platinum, NJHMFA, Chenoa Fund, and many county-level programs work with conventional financing. We model the stack before you write the offer.

Investment Property Conventional

Up to 10 financed conventional loans. 15-25% down depending on units and rate strategy. Cash flow from rents helps qualify. Strong path for first-time investors before stepping into DSCR or Non-QM products.

Second Home / Vacation

10% down on a true second home. Conventional financing for vacation properties (Tahoe, Wildwood, Long Beach Island, San Diego, etc.). Must meet occupancy requirements and be a reasonable distance from the primary residence.

Lender-Paid Mortgage Insurance (LPMI)

No monthly mortgage insurance payment. LPMI bakes the MI cost into a slightly higher rate. Often makes sense for borrowers who plan to keep the loan less than 7 to 10 years or want a clean monthly payment structure.

MI Removal Path

Conventional PMI is removable. Drops automatically at 78% LTV based on original value. We help borrowers request early removal if home values have risen enough to clear 20% equity.

The big advantage: conventional mortgage insurance is removable. Once you cross 20 percent equity, you can request PMI removal, dropping your monthly payment without refinancing. FHA loans typically carry MI for the life of the loan. For long-horizon borrowers with solid credit, conventional often wins on lifetime cost.

Who conventional is best for

  • Borrowers with 700+ credit scores who want the lowest mortgage insurance cost
  • First-time buyers using HomeReady or Home Possible 3% down programs
  • Move-up buyers with strong equity (20% down or more)
  • Borrowers who want PMI that drops automatically at 78% LTV
  • Investors building a portfolio (up to 10 financed conventional loans)
  • Second-home buyers (vacation properties, true secondary residences)
  • Refinance clients dropping rate or removing FHA mortgage insurance
  • Buyers in California, New Jersey, and nationwide markets up to county conforming limits

How conventional compares to FHA

  • Mortgage insurance drops: Conventional PMI ends at 78% LTV. FHA MIP usually lasts the life of the loan.
  • Higher credit, better pricing: Conventional often beats FHA on rate and MI cost above 700 credit.
  • 3 percent down options: HomeReady and Home Possible match FHA's low-down feel for qualifying first-time buyers.
  • Investor and second-home eligible: FHA is owner-occupied only. Conventional opens investment and vacation properties.
  • Slightly stricter: Conventional typically wants 620+ credit and a cleaner DTI than FHA.
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Run a conventional scenario with a real advisor.

We'll model conventional with 3 percent, 5 percent, 10 percent, and 20 percent down so you can see which actually wins for your situation.

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