Benefits of Conventional Loans

Lower Interest Rates
Borrowers with good credit (700+) typically have access to lower interest rates than FHA loans.

Flexible Loan Terms
Choose 10, 15, 20, or 30-year repayment terms based on your financial goals.

No Mortgage Insurance with 20% Down
Unlike FHA loans, which feature Mortgage Insurance Premium (MIP) for the life of the loan, conventional borrowers can avoid Private Mortgage Insurance (PMI) with a 20% down payment.

Greater Loan Amounts
Conventional loans allow for greater loan amounts than FHA loans. The FHFA has updated the 2025 conforming loan limit. You can check the current amounts on the FHFA website.

More Property Options
Conventional loans can be utilized to buy primary residences, vacation homes, and investment properties, but FHA loans can be used to buy primary residences only.

Cons of Conventional Loans

Stricter Credit Standards
Most lenders require a credit score of 620 or higher, and those with scores below 700 may not receive the best rates.

Higher Down Payment for Some Buyers
While first-time buyers can put down as little as 3% down payment, others who do not qualify may need to put down 5–20% down.

PMI for Low Down Payment
Because you’re making a down payment of less than 20%, you’ll need to pay private mortgage insurance (PMI) until you’ve reached 20% equity.

Debt-to-Income Ratio (DTI) Limits
Most lenders favor a DTI of less than 43%, which means monthly debts shouldn’t be more than 43% of your gross income.

Is a Conventional Loan Right for You?

A conventional loan is ideal for buyers with good credit, stable income, and the ability to make a larger down payment. If you need lower up-front costs and more forgiving credit requirements, an FHA loan may be more ideal.

(research based information- values can change based on differing factors)