The most popular mortgage in America — and the one with the most flexibility. Here's everything you need to know, including how to pair it with a buyer rebate for maximum savings.
A conventional loan is any mortgage that isn't backed by a government agency (FHA, VA, or USDA). Instead, conventional loans are originated by private lenders and typically sold to Fannie Mae or Freddie Mac — the two government-sponsored enterprises that set the rules for "conforming" loans.
Because there's no government guarantee, lenders take on more risk with conventional loans. That's why credit and income requirements tend to be stricter than FHA. But in exchange, you get significant advantages: removable PMI, no upfront mortgage insurance premium, and more flexibility on property types.
| Requirement | Conventional | FHA (Comparison) |
|---|---|---|
| Minimum Credit Score | 620 (740+ for best rates) | 580 (500 with 10% down) |
| Down Payment | 3–20%+ | 3.5% |
| Mortgage Insurance | PMI if <20% down (removable) | MIP for life (if <10% down) |
| Upfront Insurance Fee | None | 1.75% of loan amount |
| Debt-to-Income Ratio | Up to 45% (50% with strong factors) | Up to 57% |
| 2026 Conforming Limit | $806,500 (higher in HCOL areas) | $498,257–$1,149,825 |
| Property Types | Primary, second home, investment | Primary residence only |
Fannie Mae's HomeReady and Freddie Mac's Home Possible programs allow as little as 3% down for borrowers meeting income limits (typically 80% of area median income). These programs also allow gift funds for the entire down payment.
The standard conventional minimum. PMI applies but at lower rates than FHA's MIP. On a $600,000 home, you'd need $30,000 down — and your PMI might run $150–250/month depending on credit score.
Lower PMI rates, stronger offer in competitive markets, and a faster path to 20% equity. Many buyers find this balances monthly savings with keeping adequate cash reserves.
Eliminates private mortgage insurance entirely. On a $700,000 home, that's $140,000 down — but you save $200–400/month in PMI from day one.
Private mortgage insurance (PMI) is required when you put less than 20% down on a conventional loan. Unlike FHA's mortgage insurance premium — which sticks with the loan for its entire life if you put less than 10% down — conventional PMI has a clear path to removal:
| Credit Score | 5% Down PMI Rate | 10% Down PMI Rate | Monthly on $600K Loan |
|---|---|---|---|
| 760+ | 0.30% | 0.15% | $75–150 |
| 720–759 | 0.45% | 0.25% | $125–225 |
| 680–719 | 0.65% | 0.40% | $200–325 |
| 640–679 | 0.90% | 0.60% | $300–450 |
| 620–639 | 1.25% | 0.85% | $425–625 |
See exactly how much cash back you'd receive at closing with ShopProp's flat fee — and how it could reduce your PMI timeline.
Calculate Your Savings| State | Standard Limit | High-Cost Area Limit | Key High-Cost Counties |
|---|---|---|---|
| Washington | $806,500 | $1,037,550 | King, Snohomish, Pierce |
| California | $806,500 | $1,209,750 | San Francisco, San Mateo, Santa Clara, LA, Orange |
| Hawaii | $806,500 | $1,209,750 | All counties (high-cost statewide) |
| Colorado | $806,500 | $1,037,550 | Eagle, Pitkin, San Miguel |
| Arizona | $806,500 | $806,500 | Standard statewide |
| Texas | $806,500 | $806,500 | Standard statewide |
| Virginia | $806,500 | $1,037,550 | Arlington, Fairfax, Loudoun |
| Michigan | $806,500 | $806,500 | Standard statewide |
If your purchase price exceeds these limits, you'll need a jumbo loan — which has stricter requirements but is available through ShopProp in all 8 states.
Here's what most buyers miss: the commission you pay your agent affects your total cost of homeownership just as much as your interest rate. On a conventional loan, every dollar not spent on commission can go toward a larger down payment, lower PMI, or closing cost coverage.
| Purchase Price | Traditional 2.5% Agent Fee | ShopProp Flat Fee | Your Rebate |
|---|---|---|---|
| $500,000 | $12,500 | $4,495 | $8,005 |
| $700,000 | $17,500 | $4,495 | $13,005 |
| $1,000,000 | $25,000 | $4,495 | $20,505 |
| $1,500,000 | $37,500 | $4,495 | $33,005 |
ShopProp buyers get managing broker oversight on every offer — plus a rebate that puts thousands back in your pocket at closing. Same representation. Flat fee. Since 2007.
Get Started Chat with Our AIConventional loan purchases — especially in competitive markets — involve tight timelines, appraisal requirements, and complex contingency decisions. At ShopProp, every transaction is overseen by a managing broker with a background in construction and finance.
That means someone who understands both the structural integrity of the property and the financial mechanics of your loan is reviewing your offer, negotiating repairs, and guiding you through underwriting conditions. It's the kind of oversight that percentage-based agents charge 2–3% for — and that ShopProp delivers at a flat $4,495.
Over 4,000 transactions and 19 years, that combination of expertise and transparent pricing has saved ShopProp clients millions.