Popular Program

Conventional Loans

Q: When does PMI go away?

You can request PMI removal when you reach 20% equity. It automatically terminates at 22% equity based on the original purchase price or appraised value.

Q: How do conventional rates compare to FHA?

For borrowers with 700+ credit, conventional rates are often lower than FHA rates — and without the lifetime MIP cost. For borrowers under 680, FHA may offer better overall terms.

Q: Can I use a conventional loan for an investment property?

Yes. Conventional loans are one of the only traditional programs available for investment properties. Expect 15% minimum down for single-family and 25% for multi-unit.

The most widely used mortgage program in the U.S. Competitive rates, flexible terms, and options from 3% down for qualified borrowers.

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Program Overview

Conventional loans are mortgage programs that are not insured or guaranteed by a government agency. They follow guidelines set by Fannie Mae and Freddie Mac and are available through private lenders. Conventional loans offer some of the most competitive rates and terms available, especially for borrowers with good credit and at least 5–20% down. They can be used for primary residences, second homes, and investment properties.

Who Is This Loan For?

✓ Homebuyers with credit scores of 620 or higher
✓ Borrowers who can put at least 3–5% down
✓ Buyers looking to avoid government-backed loan requirements (like FHA MIP)
✓ Borrowers purchasing primary residences, second homes, or investment properties
✓ Homeowners looking to refinance with competitive terms

Key Benefits

Competitive Rates

Among the lowest available rates for borrowers with strong credit profiles.

PMI Removal

Private mortgage insurance can be removed once you reach 20% equity — unlike FHA which requires MIP for the life of the loan.

Versatile Use

Available for primary residence, second home, and investment property. Government loans are restricted to primary residence only.

Flexible Terms

10, 15, 20, 25, and 30-year terms with fixed or adjustable rates.

Qualification at a Glance

Credit620+ (stronger credit improves pricing)

Down PaymentAs low as 3%

OccupancyPrimary residence, Second home, Investment property

Property TypesSingle-family, Condos, Townhomes, 2–4 units, PUDs

General Requirements

Many conventional programs start around 620, but pricing and eligibility improve materially with stronger credit
Conventional approvals often allow up to 50% total DTI with strong automated findings, though manual underwriting standards are tighter
Down payment as low as 3% for first-time buyers, 5% for most, 15–25% for investment
PMI required if less than 20% down
Property appraisal required
Stable employment and income verification (W-2, pay stubs, tax returns)
Important: Airus Lending compares conventional options across participating lenders. Pricing, reserves, and minimum score requirements vary by lender and loan scenario.

Advantages

✓ PMI can be removed at 20% equity
✓ Competitive rates for qualified borrowers
✓ Available for primary, second home, and investment
✓ No upfront mortgage insurance premium (unlike FHA)
✓ Higher loan limits than FHA in many areas
✓ More property types eligible
✓ No funding fee (unlike VA)

Tradeoffs to Consider

↔ Higher credit score requirements than FHA (620 vs 580)
↔ PMI required until 20% equity if less than 20% down
↔ Stricter DTI requirements for lower credit scores
↔ Down payment cannot always be 100% gifted (varies by LTV)
↔ Investment property requires 15–25% down

Common Scenarios

Buyer with Strong Credit and 10% Down

A borrower with 740 credit putting 10% down on a $400K home. Conventional rate is lower than FHA, and PMI will drop off after reaching 20% equity — saving thousands over the life of the loan.

Second Home Purchase

A buyer purchasing a vacation home at the beach. FHA and VA are primary residence only — conventional is the go-to option for second homes with as little as 10% down.

First-Time Buyer with 3% Down

A well-qualified first-time buyer taking advantage of Fannie Mae's 3% down program. Lower total cost than FHA when factoring in MIP savings.

Documents Typically Needed

Two most recent pay stubs
Last two years of W-2s
Last two years of tax returns
Two most recent bank statements
Government-issued photo ID
Proof of down payment funds
Homeowners insurance quote

What is the minimum down payment for a conventional loan?

3% for first-time homebuyers through specific programs (like Fannie Mae HomeReady or Freddie Mac Home Possible), 5% standard, and 15–25% for investment properties.

When does PMI go away?

How do conventional rates compare to FHA?

Can I use a conventional loan for an investment property?

Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.