Conventional Loans: The Default for Strong Files
A conventional loan is simply a mortgage not backed by a government agency. For borrowers with solid credit, it is usually the most efficient path — and it has one advantage the government loans do not.
Why strong files choose it
- As little as 3% down for qualified first-time buyers; 5% is common otherwise.
- PMI that goes away. Unlike FHA, conventional mortgage insurance can be cancelled once you reach roughly 20% equity — so it is temporary, not permanent.
- Flexibility across primary homes, second homes and investment properties.
- Better pricing with better credit, rewarding a strong profile.
Conforming limits
Most conventional loans are conforming — within the limit the Federal Housing Finance Agency sets each year (in the $800,000s for a single-family home in most of the country for 2026, and higher in designated high-cost counties). Above that limit, you move into jumbo territory, covered in its own guide.
If you are putting less than 20% down on a conventional loan, ask to compare borrower-paid versus lender-paid PMI, and a slightly larger down payment that crosses a pricing threshold. Small moves can change your payment more than you would expect.