Conventional Loans

About Conventional Loans

Conventional loans often require a higher down payment compared to FHA loans, usually around 5% to 20% of the purchase price. The credit requirements for conventional loans are typically stricter, with lenders looking for a credit score of at least 620 or higher.

However, borrowers with excellent credit may be able to secure a lower interest rate and better terms on a conventional loan. Conventional loans can be used to purchase a variety of property types, including single-family homes, multi-unit properties, and condominiums.

A conventional loan is not insured by the federal government (like USDA, FHA, and VA loans) and can be the preferred route to home financing for many homebuyers and those purchasing an investment property.

Get more information about the home buying process

Some Key Conventional Loan Characteristics

High Financing Options: Up to 97% financing available.
Seller Contributions: Sellers can cover 3-9% of closing costs and prepaid expenses, depending on the buyer’s down payment.
Mortgage Insurance: Required for down payments under 20%, with costs varying based on the down payment and credit score.
Flexible Mortgage Insurance Removal: Can be eliminated for loans with less than 20% down through an upfront fee or a higher interest rate.
Credit Requirements: Minimum credit score of 620.
Gift Fund Flexibility: Gift funds are allowed, provided they come from a relative.
Full Gift Fund Down Payments: The entire down payment can be covered by gift funds.
No Income Restrictions: Borrowers face no income limitations for eligibility.

Considerations for Borrowers

Property Flexibility: No requirement to meet HUD guidelines or undergo a HUD appraisal.
Higher Loan Limits: Maximum loan amount up to $806,500.*
Co-Borrower Options: Non-occupant co-borrowers are allowed.
Inspection Requirements: Inspections are not mandatory unless the appraiser identifies deficiencies.
Condo Eligibility: Warrantable condos are acceptable.
Custom Loan Solutions: Portfolio loan options may be available for unique scenarios on a case-by-case basis.

*The maximum loan amount is updated every year. This number is for 2025.

Qualifying for a Conventional Loan

Conventional loans have more stringent requirements than government-backed loans but provide flexible terms for qualified buyers:

Credit Score: A minimum credit score of 620 is typically required.
Down Payment: Options start as low as 3%, but a higher down payment can eliminate mortgage insurance and reduce costs.
Debt-to-Income Ratio (DTI): Lenders usually prefer a DTI of 43% or lower, though exceptions may apply based on other qualifications.
Employment and Income: Steady employment and consistent income over the past two years are essential for eligibility.
Asset Documentation: Proof of funds for the down payment, closing costs, and reserves is required.
Gift Funds: Allowed for down payments and closing costs, provided they come from an eligible relative.

Conventional loans are a perfect option for people with great credit, consistent income and savings.
If you have any questions about Conventional Loans, don’t hesitate to reach our to my team at
(210) 987-8943. We are happy to answer your questions and would love to work with you!

Office Phone : (210) 987-8943

Mobile Phone: 210-269-1774

This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.

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