Paid monthly
Part of your mortgage payment. This is the kind you can ask to remove later.
Conventional loans
Conventional loans: the most common kind of home loan.
A conventional loan is a mortgage that is not insured by the government and follows Fannie Mae or Freddie Mac rules. It suits buyers and owners whose credit and savings fit those rules, and anyone buying a second home or a rental. Fidelity Residential is a licensed direct mortgage lender.
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Here is what a conventional loan asks of you and of the home, how it compares with FHA and jumbo loans, how its mortgage insurance works and comes off, and how to refinance with one.
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- Fixed and adjustableWe can quote both so you can compare them.
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The basics
What a conventional loan is
A conventional loan is made by a private lender and is not insured by the government. It follows the rules of Fannie Mae or Freddie Mac, which buy most home loans, and it is reviewed through their automated underwriting systems.
A conforming loan is a conventional loan within the conforming limit set each year for the county, which is higher in high-cost counties; a jumbo loan is a conventional loan above it.
A conventional loan can buy or refinance a main home, a second home or a rental of one to four units, with a fixed or an adjustable rate.
Who a conventional loan suits
- Your credit and savings fit the agencies’ rules
- You are buying a second home or a rental; FHA is for the home you live in
- You want mortgage insurance that can come off later
Conventional loans at a glance
- What it is: a mortgage that follows Fannie Mae or Freddie Mac rules and is not insured by the government, reviewed through their automated underwriting systems.
- Who it suits: buyers and owners whose credit and savings fit the agencies’ rules, and anyone buying a second home or a rental.
- Homes: a main home, a second home or a rental of one to four units, including condominiums in projects that meet agency standards, townhomes and planned-unit developments; fixed or adjustable.
- Credit score: conventional loans accept credit scores from 620 at some programs; we can tell you which fit your file.
- Mortgage insurance: usually yes with a smaller down payment; monthly mortgage insurance on a conventional loan can be removed later.
- How long it takes: often about three to four weeks once the file is complete.
- Where we lend: licensed in 40 states and the District of Columbia; the full, current list is on NMLS Consumer Access (opens in a new tab).
At a glance updated 11 November 2026. General information, not a commitment to lend; each program sets its own terms.
Credit score figure as read on 10 November 2026 from the program documents on file; it is due for review by 10 December 2026. It is one program’s own limit, not an offer or a loan decision.
Requirements
Conventional loan requirements
Fannie Mae and Freddie Mac set the rules, and each program may add its own. In general terms, this is what a conventional loan asks of you and of the home.
- Credit that fits the program’s rules; the agencies set waiting periods of their own after a bankruptcy or foreclosure. The credit score figure on file is in the at-a-glance box above
- Income you can document, with pay stubs and W-2 forms or tax returns
- Debts that fit the standard limits once the new payment is counted with your other debts
- A down payment: some conventional programs for first-time buyers allow a smaller down payment, and a gift from family can help; a second home or a rental asks for more
- Savings after closing: many loans on a one-unit main home need none; second homes, rentals and homes of two to four units need some
- Mortgage insurance: usually yes when the down payment is small, and the monthly kind can be removed later
- Loan size within the conforming limit for the county; above it, the loan is a jumbo loan
- The home: a main home, a second home or a rental of one to four units, including condominiums in projects that meet agency standards; an appraiser values it, or the automated system may offer another way to confirm the value
- Residency: permanent residents and lawfully present visa holders are considered on the same terms as citizens
First-time buyers using the smallest down payment options may be asked to take a short homeownership course first.
Compare
Conventional, FHA and jumbo loans compared
The questions that separate a conventional loan from an FHA loan and a jumbo loan.
| Question | Conventional loan | FHA loan | Jumbo loan |
|---|---|---|---|
| Who stands behind it | A private lender; not insured by the government; follows Fannie Mae or Freddie Mac rules | A private lender, with the loan insured by the Federal Housing Administration | A private lender; the agencies do not buy it, so each jumbo program writes its own rules |
| Loan size | Up to the conforming limit set each year for the county | Up to the FHA loan limit for the county | Above the conforming limit |
| The down payment | Some programs for first-time and lower-income buyers allow a smaller down payment | FHA’s minimum is smaller than most conventional loans ask for | The larger the loan, the larger the down payment programs ask for |
| Credit | Each program sets its own credit rules | FHA accepts lower scores than most conventional loans | Each program sets its own rules, and they tighten as the loan grows |
| Mortgage insurance | Usually private mortgage insurance with a smaller down payment; the monthly kind can be removed later | An upfront premium, usually added to the loan, and an annual premium on every FHA loan | None, whatever the loan-to-value |
| The home | A main home, a second home or a rental of one to four units | Your main residence | A main home, a second home and, in several programs, a rental property |
Mortgage insurance
How mortgage insurance works on a conventional loan
With a smaller down payment, a conventional loan usually carries private mortgage insurance. It protects the lender, not you, if a borrower stops paying. With a large enough down payment, none is needed.
A single premium
Paid once, at closing. It is usually not refunded if you sell or refinance early.
Built into the rate
A higher rate pays for the coverage, and that cost stays for the life of the loan.
Removing monthly mortgage insurance. The coverage is the same whichever way you pay; what changes is who pays, when, and whether the cost can ever end.
- When: once your balance falls to a set share of the home’s original value, you can ask your servicer to remove it; federal law also ends it automatically a little later, provided your payments are up to date.
- How: make the request in writing, and keep your payments current with a good recent history.
- What is checked: that the home’s value has not fallen and that there is no second loan on it.
- On an FHA loan: the annual premium follows FHA’s own rules; refinancing into a different loan later is one way some owners remove it.
For the full comparison, see Mortgage insurance: what it costs and who can pay it.
Already own a home?
Refinancing with a conventional loan
A refinance is a new mortgage that pays off the mortgage you have, with its own closing costs. An appraisal sets the current value; some conventional loans get a waiver.
Rate-and-term refinance
Replaces your mortgage to change the rate, the length of the loan or both. It can also replace an adjustable loan with a fixed one.
Refinancing your mortgageCash-out refinance
Replaces your mortgage with a larger one and pays you the difference, up to a set share of the home’s current value. A conventional loan offers it on the home you live in, a second home and a rental.
Cash-out refinancesFrom FHA to conventional
An FHA loan can be replaced with a conventional one when your credit, income and the home’s value fit conventional rules. It is one way some FHA owners remove the annual premium.
FHA loan vs conventional loan
How it works
The steps to a conventional loan
Talk and get a quote
We ask about the home, your savings, income and credit, and quote the conventional options that fit, with a fixed and an adjustable rate side by side if you want to compare.
Apply and send documents
You complete the application and allow a credit report. The automated underwriting findings list the documents your loan needs.
The home is valued
An appraiser values the home, or the program’s automated system may offer another way to confirm the value.
Underwriting and closing
An underwriter checks your documents against the program rules. You review your closing disclosure and sign.
What documents you need
The automated findings list exactly what your loan needs. Most buyers can start with these.
- Recent pay stubs and your W-2 forms
- Tax returns, and if you are self-employed, a year-to-date profit and loss statement
- Bank statements showing the money for the down payment and closing costs
- A gift letter if family is helping with the down payment
- Your signed purchase contract, once you have one
- Photo identification for everyone on the loan
Questions
Common questions about conventional loans
What is a conventional loan?
A mortgage that follows Fannie Mae or Freddie Mac rules and is not insured by the government. A conforming loan is a conventional loan within the conforming limit set each year for the county; a jumbo loan is a conventional loan above it. A conventional loan can be set up with a fixed or an adjustable rate, for a main home, a second home or a rental.
What are the requirements for a conventional loan?
In general terms: credit that fits the program’s rules, income you can document, debts that fit the standard limits once the new payment is counted, a down payment and the money for closing, mortgage insurance in most cases when the down payment is small, a loan within the conforming limit for the county, and a home that meets the agencies’ standards. See the conventional loan requirements above.
What credit score do I need for a conventional loan?
Each program sets its own minimum, and the agencies set waiting periods of their own after a bankruptcy or foreclosure. The credit score figure on file, with the date it was read, is in the at-a-glance box above. We can tell you which programs fit your file after reviewing your credit.
Do I need a large down payment for a conventional loan?
Not always. Some conventional programs for first-time and lower-income buyers allow a smaller down payment, and a gift from family can help. With a smaller down payment the loan usually carries private mortgage insurance; with a large enough one it does not. A second home or a rental asks for a larger down payment than a main home.
Can mortgage insurance on a conventional loan be removed?
Monthly mortgage insurance can. Once your balance falls to a set share of the home’s original value, you can ask your servicer to remove it, and federal law ends it automatically a little later, provided your payments are up to date. A single premium paid at closing is usually not refunded, and a cost built into the rate stays for the life of the loan. See how mortgage insurance works on a conventional loan.
Is a conventional loan harder to get than an FHA loan?
It can be. FHA accepts smaller down payments and lower credit scores than most conventional loans. If your credit and savings could fit both, ask for both and compare the two loan estimates side by side for the same home, including the mortgage insurance on each. See FHA loan vs conventional loan.
Can I refinance an FHA loan into a conventional loan?
Yes. A refinance is a new mortgage that pays off the mortgage you have, with its own closing costs, so an FHA loan can be replaced with a conventional one when your credit, income and the home’s value fit conventional rules. Refinancing into a different loan is one way some FHA owners remove the annual premium.
Do you lend in my state?
Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.
Sources: Federal Housing Finance Agency, FHFA conforming loan limits (opens in a new tab); Consumer Financial Protection Bureau, When can I remove private mortgage insurance (PMI) from my loan? (opens in a new tab). Facts are stated in our own words.
Ready to talk about a conventional loan?
Get a quote, apply online, or call us to talk it through.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.
Reviewed by Robert Shamie, CEO, NMLS #241428 · Last reviewed:
Fidelity Residential (PFN Lending Group, Inc., NMLS #103098) is a direct mortgage lender licensed in 40 states and the District of Columbia, with 26 years in business.