Conventional Home Loan

If you're buying a home or looking to refinance, understanding conventional home loan options is essential. A conventional loan—also known as a conforming loan—meets the guidelines set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that buy and securitize mortgages. These loans are not backed by a government agency like FHA or VA, but offer competitive rates and flexible terms for qualified borrowers.

To qualify for a conventional loan, lenders typically look for:

• A credit score of 620 or higher (the higher, the better)
• A debt-to-income ratio below 45%
• Stable income and employment history
• A minimum down payment of 3% to 5% depending on the program and borrower profile

If you're purchasing a second home, you’ll need at least 10% down, and multi-unit properties may require more. These conventional loan requirements can vary slightly depending on the lender and property type.

If you currently have an FHA loan, you may be able to refinance your home from FHA to a conventional loan—especially if you've built at least 20% equity. This is a great option for homeowners who want to remove monthly FHA mortgage insurance premiums (MIP) and possibly lower their overall payment.

Benefits of refinancing from FHA to conventional include:

• No more MIP once you reach 20% equity
   
• Access to better rates with strong credit
• Flexibility to remove PMI once you hit the equity threshold

This refinance option is particularly popular in markets like Las Vegas and Los Angeles, where rising home values can help homeowners reach that equity milestone faster.

With a conventional loan, if you put less than 20% down, you’ll likely be required to pay Private Mortgage Insurance (PMI). Unlike FHA mortgage insurance, PMI can be removed once you reach 20% equity.

PMI can be:

• Paid monthly as part of your mortgage
• Paid upfront as a single premium
   
• Split between upfront and monthly payments

Once your loan reaches 22% equity, your servicer is required to remove PMI automatically—no refinance needed.

If a conventional loan doesn’t fit your situation, there are non-conforming alternatives such as:

• Jumbo loans for high-value properties
• Bank Statement Loans for self-employed borrowers
   
• DSCR Loans for real estate investors

A licensed mortgage broker can help you explore the right solution based on your credit, income, and homeownership goals.

Whether you're a first-time buyer, investor, or looking to refinance from FHA to a conventional loan, we can help you navigate your options in California, Nevada, Arizona and Texas with local offices in Los Angeles, Las Vegas and throughout the country.

📞 Contact us today to find out if you qualify for a conventional home loan and to get personalized guidance based on your goals.