Conventional loans are the closest you can get to a standard mortgage. There are no special eligibility requirements, pretty much all lenders offer them, and you can qualify with just 3%-5% down as well.

Thanks to their low rates and wide availability, conventional loans are the most popular mortgage for home buying and refinancing.  


As with any loan, approvals are determined by your credit score and credit history. While conventional loans typically require a minimum credit score of 620, many lenders can make their own requirements, so shopping around for the right lender source is important. The interest rates for conventional loan are also heavily based on your credit score, especially in comparison to rates for FHA loans or other government backed loans. Another thing to consider with conventional loans is PMI


Contrary to popular belief, you don’t really need 20% down payment for a conventional loan, unless you want to put that much down, or don’t want to pay PMI. You can actually get a conventional loan with as little as 3% down with many lenders. There are basically six major mortgages down payment options, ranging from 3% to 20%. These types of conventional loans include:

  • Conventional 97 loan — 3% down
  • Fannie Mae HomeReady loan — 3% down
  • Freddie Mac Home Possible loan — 3% down
  • Conventional loan with PMI — 5% down
  • Piggyback loan (no PMI) — 10% down
  • Conventional loan without PMI — 20% down


In a nutshell, a conventional loan is any loan that is not insured or backed by the government in any way. For example, FHA or VA loans aren’t conventional mortgages, because those loans are supported by government programs.


A conventional loan can be a conforming or non-conforming loan which are fancy ways of referring to the loan limits and what you can borrow with a conventional loan. To be a conforming loan, a conventional mortgage must meet the loan limits spelled out by either Fannie Mae or Freddie Mac, the two government agencies that oversee mortgage lending. Loan amounts are set by the government, and the maximum conforming loan amount is based on where you live. To date, the maximum confirming loan amount is $510,400 for most states.  But if you live in certain high-cost housing markets like California and Florida, the limit increases to well above $700k.


A non-conforming loan on the other hand wouldn’t follow those loan limits or other mortgage guidelines set by Fannie Mae and Freddie Mac. A jumbo loan is a common example of a non-conforming loan. A jumbo loan (or jumbo mortgage) is a type of financing where the loan amount is higher than the “conforming” loan limits set by the Federal Housing Finance Agency (FHFA). So basically, any loan more than the $510,400 amount.  


As mentioned above, your credit score and credit history both play a key role in getting approved for a conventional loan. If you believe your credit score is lower than 620, contact Legacy Credits to learn how you can boost your credit score in less than 45 days. A higher credit score will not only aid in your approval process, but it will also ensure that you get a lower interest rate and PMI.