Raise your credit score before applying if you can.
Conventional Home Loans Made Simple
Flexible terms. Low rates. Smarter paths to homeownership.
What Is a Conventional Loan?
A conventional home loan is a privately funded mortgage that follows underwriting guidelines commonly set by Fannie Mae and Freddie Mac. It is not government-insured (unlike FHA or VA), which gives lenders and borrowers more program flexibility.
It’s ideal for buyers with good credit and stable income.
Great for primary & second homes, or investment properties.
You’ll enjoy more flexibility in loan terms and property types.
Benefits of a Conventional Loan
Conventional loans are a popular choice because they give you flexibility and control. They work well if you have a solid credit history and want options for down payments, property types, and loan terms. They can help you build equity faster and keep your monthly payments predictable.
Low-rate mortgage loans
Best for well-qualified borrowers, conventional loans often deliver very competitive interest rates.
Flexible down payment choices
Down payment options range from 3% to 20%, and with a 20% down payment, you can avoid paying private mortgage insurance (PMI).
Multiple property types allowed
You can use conventional financing for primary residences, second homes, and many investment properties.
Choice of terms
Fixed-rate and adjustable-rate (ARM) options let you match monthly payments to your plans and timeline.
Fast path to equity
With higher down payments and standard amortization, you build equity faster than many government programs that require mortgage insurance.
Conventional Loan Types
Conventional loans are flexible, and they benefit borrowers in many ways. If you’re comparing purchase options, we will guide step-by-step scenarios so you can pick the path that minimizes total cost while matching your needs. Here are the common ways homebuyers use the conventional loan option.
Conventional loans for purchase :
A common choice for buyers with good credit and a solid down payment.
Conventional refinance :
Replace your existing mortgage with better rates or more favorable terms.
Conventional cash-out refinance :
Use your home’s equity for projects, debt consolidation, or other financial needs.
FHA-to-Conventional refinance :
Refinance into a conventional loan to remove FHA mortgage insurance once you've built enough equity.
Conventional second home loan :
Finance a second home or investment property using a conventional mortgage.
Conventional Loan Requirementsn
Below are the common conventional loan requirements most lenders use. These are guidelines that Rize Mortgage reviews each application holistically and can help you navigate options.
Credit score
Usually, a score of 620 or higher works, but higher scores can get you better rates.
Down payment
You can put down as low as from 3% to 20%, putting 20% usually means no PMI.
Debt-to-income (DTI)
Rize Mortgage prefers a DTI of 45% or less, but exceptions can be made based on your situation.
Cash reserves
We want a few months' savings left after closing, it varies by program and property.
Documentation
You’ll need a steady income and employment. If self-employed, tax returns and bank statements are required.
Property requirements
The home should be in good condition and meet basic standards for financing.
How to Get a Conventional Mortgage Loan with Rize
Getting a conventional loan is easy with a Rize Mortgage loan officer guiding you through each step, explaining options such as fixed vs. ARM, term length, PMI removal, and helping you choose the plan that fits your goals.
Check your estimate :
Use our calculators to estimate your loan amount, monthly payment, and affordability.
Apply & get pre-approval :
Submit basic documents so we can verify details and issue pre-approval.
House Hunting & offer :
Make offers with confidence, your pre-approval strengthens your bid.
Loan processing & underwriting :
We order the appraisal, review your file, verify documentation, and keep you updated throughout.
Rate lock & closing :
Lock in your interest rate, review your final Closing Disclosure, and complete the mortgage process with clear upfront costs.
Tips to get the best conventional loan terms
1
If possible, increase the down payment to reduce PMI and show a stronger LTV.
2
Shop mortgage points only if you plan to stay long enough to break even.
3
Avoiding big purchases during the financing of new debt can delay approvals.
4
Use lender credits smartly, they reduce upfront costs but may raise your rate.
5
FAQ (Frequently Asked Questions)
Is a Home Inspection Required for a Conventional Loan?
A home inspection is not mandatory for a conventional loan, but it is strongly recommended. Lenders only require an appraisal to verify the property’s value for conventional mortgages. However, an inspection provides a deeper look at the home’s condition, helping buyers avoid costly repairs later. Skipping an inspection could mean unexpected expenses after closing, especially for first-time buyers.
Are Conventional loans assumable?
Most conventional loans are not assumable, except in rare cases where the lender allows it. Unlike VA loans, conventional mortgages usually require the new buyer to secure their own financing. Assumable loans are uncommon in today’s conventional market, but some older or specialized loans may allow it.
Do Conventional loans require PMI?
Yes,conventional loans require private mortgage insurance (PMI) if you put less than a 20% down payment. PMI protects the lender if you default on the loan. The cost depends on your credit score, down payment size, and loan amount. The good news is PMI can usually be removed once you reach 20% equity in your home—unlike FHA mortgage insurance, which may last for the life of the loan. This makes conventional loans more appealing for borrowers planning to build equity quickly.
What is the difference between a Conventional loan and an FHA loan?
The main difference is that a conventional loan is not government-backed, while an FHA loan is insured by the Federal Housing Administration. FHA loans are designed to help borrowers with lower credit scores and smaller down payments, but they require upfront and annual mortgage insurance. Conventional loans generally require higher credit and down payment but may cost less in the long run since PMI can be canceled.
How does a Conventional loan work?
A conventional loan works by providing funds from a lender to purchase or refinance a home, repaid in monthly installments over a set term (usually 15–30 years). The loan terms, interest rate, and monthly payment are based on your credit, income, loan amount, and down payment. Conventional loans can be fixed-rate or adjustable-rate, offering flexibility depending on your needs. Since they are not government-backed, lenders assume more risk, which is why borrower qualifications are stricter than FHA or VA loans.
Ready to see your conventional loan options?
Pre-qualify in minutes or speak with a local loan officer to get a tailored plan and a pre-approval letter for your home search.
