Conventional Loans — Conforming Mortgages
Conventional loans are the most common type of mortgage in the United States. They conform to underwriting guidelines set by Fannie Mae and Freddie Mac and are not insured by a government agency. For borrowers with good credit and at least 5% down, they're usually the lowest-cost option — and unlike FHA, the private mortgage insurance (PMI) drops off automatically once you reach 78% loan-to-value.
Highlights
- 3% down for qualifying first-time buyers (HomeReady, Home Possible)
- 5% down for standard conventional
- PMI drops automatically at 78% LTV (or can be requested at 80%)
- 2026 baseline conforming loan limit: $806,500 for a 1-unit home
- Higher limits in designated high-cost counties (check your county)
- Fixed-rate 30, 25, 20, 15, and 10-year options, plus ARMs
- Available for primary residence, second home, or investment property
When conventional beats FHA
If your credit score is 680+ and you have 5% or more to put down, a conventional loan is usually cheaper than FHA over the life of the loan — because you can eventually remove PMI, and PMI pricing scales with your credit. Above 740 FICO and with 10% down, conventional is almost always the better deal. We run both scenarios side by side so you see the actual cost difference before you commit.
Conforming loan limits
The 2026 baseline 1-unit conforming loan limit is $806,500 — meaning you can borrow up to that amount with a conforming conventional loan in most counties. Some counties, including parts of the Denver metro, have limits above the baseline. Above the conforming cap, you enter jumbo-loan territory. Look up your county's current limit at searchconformingloanlimits.com.
Frequently asked questions
What's the difference between conventional and FHA?
Conventional loans are not government-insured — they conform to guidelines set by Fannie Mae and Freddie Mac. They usually require stronger credit and higher down payments than FHA, but they let you remove PMI once you reach 20% equity, and often cost less over the life of the loan for borrowers with good credit.
What's the minimum down payment?
3% for qualifying first-time buyers (HomeReady, Home Possible). 5% for standard conventional loans. 10–20% is more common, and 20% down eliminates the need for private mortgage insurance (PMI) entirely.
How does PMI work?
Private mortgage insurance applies when your down payment is less than 20%. Unlike FHA MIP, conventional PMI drops off automatically once your loan balance reaches 78% of the original value (or earlier, on request, at 80%). You can also remove it via a new appraisal if the home appreciates.
What's the 2026 conforming loan limit?
The 2026 baseline conforming loan limit is $806,500 for a 1-unit home in most U.S. counties. High-cost counties have higher limits, up to a ceiling that also updates annually. Above the conforming limit, you'll need a jumbo loan.
Related
- FHA loans — lower credit and DTI requirements
- VA loans — 0% down for eligible veterans
- Jumbo loans — when you're above the conforming limit
- Refinance — rate-and-term and cash-out options
Ready to start?
Run your conventional scenario — full PITI + PMI cost — at Banking After Hours.