Conventional does not automatically mean 20% down, a 620+ credit score, a first-time buyer, a primary residence, or a purchase. Those are stereotypes. The product is broader than the nickname.
These meet the eligibility and loan-limit requirements established for purchase by Fannie Mae or Freddie Mac. Most conventional home loans you hear about — including many 3% down options — live in this category. Underwriting is typically run through Desktop Underwriter (DU) or Loan Product Advisor (LPA).
These do not conform to standard Fannie Mae or Freddie Mac requirements. Jumbo loans are the example most people know — financing above the applicable conforming limit. Terms, down payment, and credit expectations can differ by lender.
Eligible conventional financing can be available with as little as 3% down . That is not a marketing line from 2012. It is still how some conventional purchase programs are structured in 2026 — for eligible first-time buyers and, in certain cases, eligible repeat buyers.
The right down payment depends on program eligibility, credit, occupancy, property type, loan-to-value, reserves, and what the automated underwriting system will accept. Putting more down can lower PMI, improve pricing, or help a borderline file. It is a strategy question, not a moral one.
A few named programs are the ones most borrowers are asking about. Availability can vary across the 160+ wholesale lenders we access, and eligibility is never one-size-fits-all:
Think you need 5% down because you have owned a home before? Not necessarily.
Some eligible repeat buyers can still use 3% down conventional financing. That is not a promise that every repeat buyer qualifies — and it is not a rule that 5% is required once you have owned a home.
“First-time homebuyer” is a guideline definition, not a personality type. A borrower generally may qualify as a first-time homebuyer if they have not had an ownership interest in a residential property during the preceding three years, subject to applicable program requirements.
That three-year test is why someone who sold a house years ago can sometimes use first-time programs again. It is also why a person who has never owned can still be a conventional borrower without using a first-time-only product.
And some 3% down conventional programs are available to eligible borrowers who are not first-time buyers at all. Conventional 3% down financing is not a club for people who have never held a deed.
There is no longer a universal 620 minimum credit score for conventional loans.
Fannie Mae’s Desktop Underwriter and Freddie Mac’s Loan Product Advisor can evaluate eligible borrowers without a universal minimum credit score when the automated underwriting system provides an acceptable recommendation. That is a meaningful change from the old “conventional starts at 620” shortcut — and it is one of the most misunderstood parts of conventional mortgage requirements.
It does not mean anyone can qualify regardless of credit. It does not mean every lender will approve every score. Manual underwriting can still have credit-score requirements. A lower score can still affect pricing, overlays, and whether a file even gets to a workable finding.
Your credit score matters, but it isn’t the whole story.
Lenders price and underwrite a person, not a three-digit headline. If you have been told you are “too low for conventional,” it is worth a second look at the actual file — not just the score.
Conventional mortgage requirements are a stack of findings, not a poster on the wall. Credit, income, employment, DTI, assets, the property, and occupancy all interact. What follows is how we explain that stack to real people — without pretending every file is judged the same way.
Private mortgage insurance (PMI) is typically required on a conventional loan when you put down less than 20% on a primary residence. It protects the lender, not you — and it is the reason many buyers do not have to wait until they have 20% sitting in a savings account.
PMI cost depends on credit, loan-to-value, occupancy, loan amount, and the specific mortgage insurance structure. Second homes and investment properties follow different down-payment and MI conventions. PMI is not automatically a reason to avoid conventional financing, and it is not automatically worse than FHA mortgage insurance.
On many conventional loans, PMI can be cancelled once you reach the required equity threshold and meet the servicing rules — often by request around 80% LTV and automatically at 78% of original value when you are current. That cancellability is one of the practical differences versus FHA MIP on many purchase files.
The goal isn’t simply to avoid PMI. The goal is to find the mortgage structure with the best overall financial outcome.
Conventional home financing is not a purchase-only product. Shelton Mortgage Team structures conventional loans for buying and for refinancing. A refinance should be judged against your full picture — payment, mortgage insurance, cash needed, how long you will keep the loan — not the interest rate in isolation.
Conventional purchase loans can serve first-time buyers, repeat buyers, primary residences, second homes, investment properties, and 1–4 unit homes — when the file and the property fit the guidelines.
A conventional rate/term refinance replaces the current mortgage without taking substantial cash out. Typical goals: a lower rate, a different term, a restructured payment, or addressing mortgage insurance when eligible.
A conventional cash-out refinance lets eligible homeowners convert equity into cash for improvements, debt consolidation, major expenses, or other eligible goals — subject to LTV and occupancy rules.
Eligible conventional financing can cover single-family homes, condos, PUDs, certain manufactured homes, and 2–4 unit properties. Occupancy is its own decision: how you will use the property often changes down payment, reserves, pricing, and documentation more than the architecture does.
Conforming loan limits are set annually. They vary by location and by the number of units. A loan above the applicable limit is generally jumbo / non-conforming financing rather than a standard Fannie Mae or Freddie Mac conventional loan.
2026 baseline conforming loan limit for a one-unit property in most of the country.
2026 one-unit high-cost ceiling in designated high-cost areas. Your county and unit count still control the actual cap.
Two-, three-, and four-unit limits are higher. If you are looking at a property near these numbers, we will check the specific county limit before you write the offer — and compare jumbo options if you need to go above them.
Conventional loans can allow the seller to pay certain closing costs, within occupancy, LTV, property-type, and guideline limits. Seller contributions generally cannot be used for the borrower’s required down payment under standard agency guidelines. That distinction surprises people, and it matters in negotiations.
This is the current general Fannie Mae framework and can differ by program, occupancy, and Freddie Mac guidelines. Limits are a ceiling, not a promise the seller will contribute.
A conventional loan may be worth a serious look if any of the following sounds like you. None of this is a guarantee of approval.
Conventional is not automatically best. FHA can be the cleaner path with thinner credit or certain condos. VA can be the stronger structure for eligible veterans and surviving spouses — often with no monthly mortgage insurance. USDA can make sense in eligible geographies with no down payment. Jumbo is simply the tool when you are above the conforming limit. A first-lien HELOC can be the better refinance structure for some equity and payoff goals.
The goal isn’t to put you into a conventional loan. The goal is to find the financing strategy that makes the most sense for you.
This is the comparison borrowers ask for most. Neither column wins in every file. Long-term cost often comes down to mortgage insurance, how long you will keep the loan, and whether PMI can come off.
Neil Shelton and the Shelton Mortgage Team educate first, then compare. We have access to 160+ wholesale lenders, which means a conventional purchase or refinance is one option on the table — next to FHA, VA, USDA, jumbo, and other structures — not the only product we know how to spell.
You don’t need to know which loan you need before you call us. That’s our job.
We will not promise guaranteed approval, the lowest rate in America, or savings we have not measured. We will put the options in plain language and help you choose on purpose.
You don’t have to figure out which mortgage program is right for you on your own. We’ll compare the available options and help you understand the numbers before you make a decision.
Neil Shelton, NMLS 1668076 | Edge Home Finance, NMLS 891464. Equal Housing Opportunity.
Information on this page is for general education and is not a commitment to lend. Approval, rates, terms, program availability, down payment options, credit evaluation, mortgage insurance, seller concessions, and occupancy rules are subject to underwriting, lender guidelines, property eligibility, automated or manual underwriting findings, and market conditions. Guidelines can differ between Fannie Mae, Freddie Mac, jumbo / non-conforming lenders, and individual wholesale overlays.
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