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Conventional Home Loan: Low Down Payment Options, Flexible Requirements, No PMI
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- 10-21 day closing
- In house underwriting
- No impact on credit
- Takes 1 min
Which Conventional Loan Option is Right for You?
Conventional loans are best for borrowers with strong credit scores, offering lower long-term costs compared to FHA loans.
A fixed-rate conventional loan may be a good fit if you:
- want a stable monthly payment
- plan to stay in the home long term
- prefer predictability over a lower short-term introductory rate
- want to avoid future rate adjustments
An adjustable-rate conventional loan may be a good fit if you:
- want a lower initial interest rate
- expect to move, refinance, or sell before the fixed period ends
- are comfortable with the possibility of future payment changes
- want short-term savings upfront
Conventional Loan Requirements
Conventional loans are not backed by a government agency like FHA or VA, so approval depends heavily on the lender’s underwriting standards and the specific program you are applying for.
General Requirements
- Credit Score: Conventional loans work best for borrowers with stronger credit, although score requirements vary by lender and program.
- Income and Employment: Lenders review your income and employment to confirm that you can repay the loan.
- Debt-to-Income Ratio (DTI): DTI compares your monthly debt payments to your income. In eligible conventional scenarios, it can go up to 50%.
- Down Payment: Qualified buyers may be able to put as little as 3% down through certain conventional programs.
- Assets and Cash to Close: Lenders also review your available funds for the down payment, closing costs, and any required reserves.
- Property Type: Conventional loans may be used for primary homes, second homes, and some investment properties, depending on the file.
- Mortgage Insurance: Private mortgage insurance usually applies when the loan-to-value ratio is above 80%.
- Gift Funds: Gift funds may be allowed in eligible conventional loan scenarios.
- Co-Borrower Options: Co-borrower or non-occupant borrower options may be available in eligible cases.
A Better Conventional Mortgage Experience: Serving Home Buyers Since 1996
The way your loan is reviewed, communicated, and moved toward closing matters more than many buyers expect. See how Austin Capital Mortgage offers a better mortgage experience.
Other lenders/Banks
Other
Lenders shopped
100+
Limited to 1
Non QM Loans
Yes
Limited
Minimum credit score
550
640+
DTI Requirements
55%
43%
Fast-track Underwriting
Yes
No
Approval Rate
93%
Lower
Closing time
7-21 days
30 days
Dedicated Loan Officer
Yes
No
Availability
24/7
Limited
Average response time
<1hour
<1 day
Today's live rates
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Frequently asked questions
What is a conventional loan?
A conventional loan is a mortgage that is not backed by a government agency like FHA or VA. It is one of the most common home financing options for buyers.
How much down payment do you need for a conventional loan?
Qualified buyers may be able to purchase with as little as 3% down through certain conventional loan programs. The exact down payment requirement depends on the program, lender, occupancy, and full loan file.
What credit score do you need for a conventional loan?
Credit score requirements vary by lender and program. A 620 score is a common benchmark in some conventional programs, but it is not a universal minimum for every conventional loan scenario.
What are the general requirements for a conventional loan?
Most lenders review your credit, income, employment, debt-to-income ratio, down payment, assets, and property type when determining whether you qualify for a conventional loan.
Can you use gift funds for a conventional loan?
Yes, gift funds may be allowed in eligible conventional loan scenarios, especially for primary residences and some second-home transactions, subject to program and documentation rules.
Is down payment assistance available for conventional loans?
Down payment assistance may be available in eligible conventional loan scenarios, depending on the borrower, program, and location. Fannie Mae and Freddie Mac both reference assistance programs offered through eligible third parties, housing finance agencies, and local programs.
Do conventional loans require mortgage insurance?
Conventional loans typically require private mortgage insurance when the loan-to-value ratio is above 80%.
Can conventional loans be used for second homes or investment properties?
In some cases, yes. Conventional financing can be available for primary residences, second homes, and some investment properties, depending on the loan program and borrower qualifications.
What is the difference between a fixed-rate and adjustable-rate conventional loan?
A fixed-rate conventional loan keeps the same interest rate for the life of the loan, while an adjustable-rate mortgage starts with a fixed rate for an initial period and then adjusts based on the loan terms.
Is a conventional loan better than FHA?
Not always. A conventional loan may be a better fit for some buyers, while FHA may be better for others depending on credit, down payment, property type, and long-term cost.
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- No impact on credit
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