What is a conventional loan?

A conventional loan is a mortgage that is not insured or guaranteed by the federal government. It is offered by private lenders like banks, credit unions, and mortgage companies. Conventional loans typically have stricter qualification requirements but offer competitive rates and flexible terms.

What credit score do I need for a conventional loan?

Most lenders require a minimum credit score of 620 for a conventional loan. However, to get the best interest rates and terms, a score of 740 or higher is recommended. Higher credit scores may also qualify you for lower down payment options.

How much down payment is required?

Conventional loans offer down payment options as low as 3% for first-time homebuyers. However, putting down less than 20% typically requires private mortgage insurance (PMI). A 20% down payment eliminates the need for PMI and may result in better loan terms.

What is PMI and when can I remove it?

Private Mortgage Insurance (PMI) protects the lender if you default on your loan. It is required when your down payment is less than 20%. You can request PMI removal once you reach 20% equity, and it is automatically removed at 22% equity based on the original loan amount.

What are the loan limits for conventional loans?

For 2024, the conforming loan limit is $832,750 for most areas. High-cost areas have limits up to $1,249,125. Loans above these limits are considered jumbo loans and have different requirements.

Can I use a conventional loan for investment property?

Yes, conventional loans can be used for primary residences, second homes, and investment properties. Investment properties typically require higher down payments (15-25%) and have slightly higher interest rates than primary residence loans.

Conventional Loans | 3% Down & Competitive Rates

What is Conventional?

Conventional loans are the most widely used mortgage product in the United States, offering flexible terms, competitive rates, and broad eligibility for a wide range of borrowers and property types. Unlike government-backed loans (FHA, VA, USDA), conventional loans follow guidelines set by Fannie Mae and Freddie Mac and are available through private lenders like Q Home Loans. For 2026, the conforming loan limit is $832,750 in most counties — meaning the vast majority of Spokane-area purchases qualify for conventional financing. Contact Q Home Loans to compare conventional options side-by-side with FHA, VA, and other programs.

Why Choose Conventional Loans?

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As Low as 3% Down

First-time buyers can put just 3% down through HomeReady and Home Possible programs. Repeat buyers start at 5%.

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PMI Drops Off at 20%

Unlike FHA mortgage insurance that stays for the life of the loan, conventional PMI is removed once you reach 20% equity.

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Investment Properties Allowed

Finance rental properties and second homes — not just primary residences. Conventional is the most versatile loan type for investors.

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Higher Loan Limits

Borrow up to $832,750 in most areas for 2026. High-cost areas go up to $1,249,125 before jumbo financing is needed.

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15, 20, or 30-Year Terms

Choose the term that fits your budget and payoff goals. Shorter terms mean higher payments but dramatically less interest.

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Less Restrictive Appraisals

Conventional property standards are more flexible than FHA — fewer repair requirements mean smoother closings on more homes.

Conventional Loans Requirements

Basic Qualifications

Credit Score: Contact Q Home Loans for details (higher scores get better rates)
Down Payment: 3% minimum (5% for investment properties)
Debt-to-Income Ratio: Typically 43%-50% maximum
Reserves: 2-6 months of mortgage payments in savings (varies by loan type)
PMI: Required with less than 20% down (can be removed later)

Required Documents

Pay stubs (last 30 days)
W-2 forms (last 2 years)
Tax returns (last 2 years)
Bank statements (last 2 months)
Investment/retirement account statements
Rental income documentation (if applicable)

How It Works

Conventional loans follow guidelines set by Fannie Mae and Freddie Mac, which purchase loans from lenders on the secondary market. This system provides liquidity to lenders and keeps interest rates competitive. With less than 20% down, you'll pay private mortgage insurance (PMI), which typically costs 0.5%-1% of the loan amount annually. Once you reach 20% equity through payments or appreciation, you can request PMI removal. Conventional loans offer the most flexibility in property types and can be used for primary residences, second homes, or investment properties.

Who Should Consider Conventional Loans?

Strong Credit Borrowers

Excellent credit history and stable income seeking the best rates

Repeat Homebuyers

Have equity from previous home to use as down payment

Investment Property Buyers

Want to purchase rental properties or vacation homes

High-Income Earners

Exceed income limits for government-backed programs

Frequently Asked Questions

Get answers to common questions about conventional loans.