Conventional loans (also known as conforming loans) are mortgages made by lenders and held in their portfolio until paid or sold. Fannie Mae and Freddie Mac purchase mortgages that meet conventional loan limits, down payment requirements, debt-to-income ratios, and other underwriting guidelines.
Both Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are government-sponsored entities created by Congress to purchase conforming mortgage loans and resell them on the secondary market.
The current 2026 Conforming Loan Limits for most locations in the U.S. is capped at $832,750 – except for some high costs locations in CA, FL, VA, DC, CO, etc. These locations are capped at $1,249,125. Borrowers in search of a larger loan amount should visit the Jumbo Loan page here.
Like all home loans, Conventional loans have some advantages and disadvantages. Conventional loans generally require a larger down when compared to FHA loans, USDA Mortgages, or VA Loans. Buyers are currently required to put down a minimum of 5% in order to obtain a Conventional loan. Please note, this down payment requirement only applies to owner-occupied primary homes. Florida’s homebuyers also have the special Hometown Heroes Program available, which will permit 100% financing for income-eligible buyers.
If you are looking for a second home or investment property Conventional loan, you can expect this down payment requirement to be 10%. One benefit is Conventional loans do not have the upfront mortgage insurance premium (MIP) requirement like all Government home loan programs.
All Government loans require this, and the fee can range from 1 to 3.3% of your loan amount. However, Conventional loans may require monthly private mortgage insurance (PMI) for down payments under 20%.
Please note, as of 2026 all conventional loans require a min 620 credit score. Homebuyers using 100% down payment assistance will need a minimum 640 credit score. Contact us for details about DPA programs available in your state.
Conventional Loan Mortgage Terms:
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Conventional loans come with a variety of different mortgage payment terms available. Home buyers can pick Adjustable Rate Terms or Fix Rate Terms. Adjustable Rate Conventional loans come in a 5-year, 7-year and 10-year terms. Fix Rate Conventional loan terms include 10-year, 15-year, 20-year, 25-year, and 30-year terms.
So what option is best for you?
Well, that depends on how much money you have available for a down payment, credit profile, etc. If you have 5% or more to put down on your new home, the Conventional home loan should certainly be looked at closely.
If money is tight for a down payment, or you want to conserve your savings, the Government home loan options like FHA, VA or USDA, maybe worth a closer look. Buyers that require larger loan amounts can learn more about Jumbo mortgage options up to 95%. See all the Loan Programs in the tab above.
Contact us, and we would be happy to review all available home loan options with you! For prompt service, you can submit the “Request Contact” form at the top of your screen. We generally respond to all submitted requests within minutes during regular business hours.