What Is a Conventional Loan?

A conventional loan is one of the most common ways to finance a home. It can be used by first-time homebuyers and experienced homeowners for a primary residence, second home, or investment property, depending on the loan program and borrower qualifications.

Conventional loans are available with different down payments, repayment terms, and interest-rate structures. This flexibility allows the mortgage to be structured around the buyer’s needs and the type of property being purchased.

Down Payment Options

A 20% down payment is not always required. Some qualified buyers may be eligible for a conventional loan with as little as 3% down.

When the down payment is less than 20%, private mortgage insurance, commonly called PMI, may be required. PMI may be eligible for removal after certain requirements are met.

The right down payment is not necessarily the largest one possible. It should be considered alongside your available funds, estimated monthly payment, closing costs, and other financial goals.

Fixed-Rate and Adjustable-Rate Options

Conventional loans may be available with a fixed or adjustable interest rate.

With a fixed-rate mortgage, the interest rate remains the same for the entire loan term, which keeps the monthly principal-and-interest payment consistent. Property taxes, homeowners insurance, mortgage insurance, and other housing expenses may still change.

An adjustable-rate mortgage typically provides a fixed interest rate for an initial period, followed by scheduled adjustments. The right option depends on your financial situation and how long you plan to keep the home and mortgage.

Is a Conventional Loan Right for You?

Every homebuyer’s situation is different. Your income, credit, available funds, monthly obligations, property, and long-term plans all help determine which conventional loan options may be available.

I will help you understand your choices, review the numbers, and structure financing that makes sense for your purchase.

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Frequently Asked Questions

What is a conventional loan?

A conventional loan is a mortgage offered through a private lender and is one of the most common ways to finance a home.

Do I need a 20% down payment?

Not necessarily. Some qualified buyers may be eligible for a conventional loan with as little as 3% down.

Is mortgage insurance required?

Private mortgage insurance may be required when the down payment is less than 20%. It may be eligible for removal after certain requirements are met.

Are fixed and adjustable rates available?

Yes. Conventional loans may offer fixed-rate and adjustable-rate options, depending on the program and borrower qualifications.

What properties can I purchase?

Conventional financing may be available for primary residences, second homes, and investment properties, subject to program requirements.