Conventional loans remain one of the most popular mortgage options in the United States, and for good reason. Designed for borrowers with good to excellent credit, steady income, and a solid financial foundation, these loans offer flexibility, competitive interest rates, and can be tailored to your long-term homeownership goals.
A conventional loan is a type of mortgage that is not backed by a government agency like the FHA or VA. Instead, these loans follow the guidelines set by Fannie Mae and Freddie Mac — two government-sponsored enterprises that standardize the mortgage process. Because they aren’t government-insured, conventional loans typically require higher credit scores than FHA or VA loans, but they also come with more flexibility and fewer restrictions.
Conventional loans offer some of the lowest interest rates available, especially if you have strong credit and a favorable debt-to-income ratio. This can translate into thousands of dollars in savings over the life of your loan.
You can choose from a variety of loan term lengths, including 15, 20, or 30 years. Want to pay off your home faster and save on interest? A shorter term might be right for you. Need to keep your monthly payments lower? A longer term gives you that option
Unlike some government-backed loans, conventional loans can be used not just for your primary residence, but also for second homes and investment properties.
If you put down at least 20% on your home purchase, you can avoid paying private mortgage insurance (PMI) altogether. Even if your down payment is less than 20%, PMI can be removed later once you build enough equity in the home.
Conventional loans can finance homes up to the conforming loan limit set annually by the Federal Housing Finance Agency (FHFA). In high-cost areas or for borrowers who qualify, high-balance conventional loans may be available.
While 20% is the traditional benchmark to avoid PMI, many lenders — including those we work with — offer 3% and 5% down payment programs for qualified buyers. We’ll help you explore:
If your down payment is less than 20%, most lenders require PMI. This protects the lender in case of default, but it doesn’t have to be permanent. Unlike FHA loans, where mortgage insurance stays for the life of the loan, PMI on a conventional loan can be:
620+ |
3%-20%+ |
Can be canceled |
More property types |
You can choose from a variety of loan term lengths, including 15, 20, or 30 years. Want to pay off your home faster and save on interest? A shorter term might be right for you. Need to keep your monthly payments lower? A longer term gives you that option
580+ |
3.5% |
Permanent (mostly) |
Primary residence only |
Most lenders require a minimum credit score of 620 for a conventional loan, but the higher your score, the better your interest rate and terms.
Conventional loans offer flexible down payment options starting as low as 3% for qualified buyers. However, putting down 20% or more allows you to avoid private mortgage insurance (PMI).
Yes. Unlike FHA loans, conventional loans can be used for primary residences, second homes, and investment properties.
Private Mortgage Insurance (PMI) is required if your down payment is less than 20%. You can avoid it by putting down at least 20%, or request to remove it once your loan-to-value ratio reaches 78%.
Yes. There are low down payment programs specifically for first-time homebuyers, and you may also qualify for local or state assistance. Our advisors will help you explore all your options.
Absolutely. Refinancing your conventional loan is often a smart way to lower your interest rate, change your loan term, or remove PMI once you have enough equity.
Conventional loans may offer better interest rates for borrowers with higher credit scores, allow more flexibility in property types, and PMI can be removed — unlike FHA mortgage insurance which is often permanent.
With Clear Mortgage, the conventional loan process typically takes 21–30 days, depending on how quickly we receive your documentation and appraisal. We’ll keep you informed every step of the way.
Yes, most lenders allow gift funds from family members to be used toward your down payment and/or closing costs, especially for first-time buyers.
It’s easy! Simply click on Apply Today and speak with a Specialist, and one of our local Houston mortgage experts will guide you through your options and next steps.
