Conventional Loans

Predictable Payments

Choose a fixed-rate loan and lock in your interest rate for the life of the mortgage, making budgeting simple.

Flexible Loan Terms

Conventional loans can be structured with varying lengths and repayment terms, giving you more control over your monthly payment.

Competitive
Rates

Qualified borrowers may enjoy lower rates compared to government-backed loans, saving thousands over the life of the loan.

Property
Versatility

Conventional loans aren’t limited to primary homes, they can be used for vacation properties and investment homes too.

What is a Conventional Loan?

A conventional loan is a mortgage not backed by a government agency such as FHA, VA, or USDA. Instead, these loans are offered by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. Because they’re so versatile, conventional loans are often the right choice for borrowers with solid credit, steady income, and the ability to make a down payment.

Whether you’re purchasing a primary residence, a second home, or even an investment property, conventional loans provide reliable options that can be tailored to your needs.

Pros and Cons of Conventional Loans

Pros

  • Often lower overall borrowing costs compared to FHA loans.

  • Flexibility to choose between fixed or adjustable-rate mortgages.

  • Can be used on a wider variety of property types.

  • Higher loan limits than some government-backed programs.

Cons

  • Higher credit score requirements (usually 620+).

  • Larger down payments may be required to avoid PMI.

  • Debt-to-income requirements may be stricter than FHA or VA loans.

Conventional vs. FHA Loans

Borrowers often compare FHA and conventional loans when deciding on the best fit. FHA loans are insured by the government and designed for those with lower credit scores or smaller down payments. Conventional loans, on the other hand, generally require stronger credit but can be more cost-effective in the long run.

Key Differences:

  • Credit Score: FHA allows scores as low as 580; conventional usually requires 620 or higher.

  • Down Payment: FHA requires as little as 3.5%; conventional can start at 3% but 20% avoids PMI.

  • Insurance: FHA loans require upfront and annual mortgage insurance; conventional loans only require PMI if you put down less than 20%.

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Who Qualifies for a Conventional Loan?

To qualify, borrowers typically need:

  • A credit score of at least 620.

  • Stable employment and verifiable income.

  • A reasonable debt-to-income (DTI) ratio.

  • A down payment (as low as 3%, though 20% avoids PMI).

Lenders may also look at financial reserves and your history of responsible credit use.

FAQ

What is a conventional loan?

A mortgage not backed by a government agency, offered through private lenders, and typically following Fannie Mae and Freddie Mac guidelines.

How is a conventional loan different from an FHA loan?

FHA loans are insured by the government and allow lower credit and smaller down payments, but require mortgage insurance. Conventional loans generally require stronger credit but can be more cost-effective in the long run.

Who qualifies for a conventional loan?

Borrowers usually need a 620+ credit score, stable income, and a reasonable debt-to-income ratio. Larger down payments can improve terms.

How much do I need for a down payment?

Conventional loans start at 3%–5% down, but putting 20% down avoids PMI and may lower your monthly payment.

Can I use a conventional loan for a second home or investment?

Yes — unlike some loan types, conventional mortgages can be used for vacation properties and investment homes.

Ready to Explore Your Options?

With over 20 years of experience, Rodrigo Ballon is a certified mortgage lender dedicated to helping Park City residents, second-home buyers, and investors achieve their homeownership goals. Backed by CrossCountry Mortgage, one of the nation’s largest and most trusted lenders, our team provides competitive rates and a full range of products.

A conventional loan could be the perfect solution for your next purchase. Let’s talk about your goals and the best financing strategy for you.

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