Conventional Loans
Conventional loans are the agency workhorses backed by Fannie Mae and Freddie Mac: purchases, refinances, second homes, and investment properties. When your credit and documentation are solid, conventional is usually the price to beat. My job is making a hundred lenders compete to beat it.
Conforming means the loan fits the guidelines Fannie Mae and Freddie Mac will buy. Because those guidelines are standardized, a hundred lenders are effectively selling the same product, which turns the game into price and service. That is the best possible setup for a broker: same loan, competing bids.
The other lever is overlays. Some lenders add their own restrictions on top of agency guidelines; others lend right to the edge of what the agencies allow. A file one bank declines can be an easy approval two desks over, at the same price. Knowing which desks lend to the guideline edge is half the value I bring on conventional files.
Where conventional stops, the rest of my menu starts: above the county loan limit is jumbo, complex income points to bank-statement programs, and portfolio-heavy investors usually outgrow conventional's property caps and move to DSCR. If that's you, the pages for those programs go deeper.
Complex or write-off-heavy income usually reads badly on a conventional application even when the business is thriving; that's what bank-statement programs are for. Above your county's conforming limit you're shopping jumbo. And investors past a handful of financed properties hit conventional's caps, where DSCR takes over. None of those are dead ends. They're doors to a different part of the menu.
| Conventional | FHA | |
|---|---|---|
| Credit grading | Stricter; pricing tightens as credit dips | More forgiving on score and history |
| Mortgage insurance | PMI only until equity supports removal | Upfront plus monthly; monthly usually stays until refinance |
| Occupancy | Primary, second homes, investment | Primary residence only |
| Debt ratios | Tighter expectations | More room for higher debt loads |
| Usually favors | Strong-credit buyers optimizing long-run cost | Buyers optimizing for approval and entry |
Program availability, guidelines, and pricing vary by lender and by the state where the property is located, and change without notice. This comparison is educational, not a credit decision or an offer. Program restrictions apply.
Less than most people assume. Low-down-payment conventional options exist for qualifying buyers, especially first-timers, and the right answer depends on your credit, the property, and whether removing PMI quickly matters to you. I'll lay out the real options side by side rather than quote a rule of thumb.
Once your equity reaches the thresholds the rules set, through paydown, appreciation, or both, PMI can be removed without refinancing. This is one of conventional's quiet advantages over FHA, where the monthly premium usually stays until you refinance out of it.
Yes, with more equity and reserves than a primary residence requires. It often prices well for investors with a small portfolio. Once your financed-property count grows, DSCR programs usually take over; I'll tell you when you're approaching that line.
It's set annually and varies by county, with high-cost areas like much of coastal California getting higher limits. Rather than quote a number that goes stale every January, I'll confirm your county's current limit in our first conversation and tell you whether you're conventional or jumbo.
Fixed buys certainty for the life of the loan. An ARM trades some of that certainty for a lower initial period, which can make sense when you have a realistic, honest timeline for moving or refinancing. The mistake is picking an ARM on hope. I'll pressure-test the timeline with you before recommending one.
