What is a conventional loan?
A conventional loan is any mortgage that isn’t insured by a federal agency like the FHA, VA, or USDA. Most conventional loans are “conforming”: they follow guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that buy mortgages from lenders. Because those guidelines are standardized, conventional loans are offered by virtually every lender, which is exactly why shopping across many lenders matters: the same borrower can see meaningfully different pricing from one lender to the next.
Conventional financing comes in fixed-rate and adjustable-rate forms and accommodates a wider range of property types and occupancy situations than most government programs, including second homes and investment properties, which FHA, VA, and USDA generally don’t finance.
How qualifying works
Lenders look at the same fundamentals on every conventional application: your credit history, your income and employment stability, your debt-to-income ratio, and the down payment you bring. Stronger profiles unlock better pricing. Conventional is the program where good credit pays you back most directly.
If your down payment is on the smaller side, private mortgage insurance (PMI) typically applies until you reach sufficient equity, and unlike FHA’s mortgage insurance, conventional PMI can be removed once you get there. Michael walks every client through where they stand on each factor and what would move the needle before applying.
Where Michael fits in
Because every lender offers conventional loans, the difference between a decent deal and a great one is who shops for you. Through Innovative Mortgage Services, Michael compares your scenario across 100+ lenders and structures the loan around your payment and equity goals, not whichever product is easiest to sell. That’s the “mortgage planner” difference.
Why borrowers choose it
- Competitive pricing that directly rewards strong credit
- PMI can be removed once you build sufficient equity
- Works for primary homes, second homes, and investment properties
- Wide choice of term lengths and fixed or adjustable structures
- Fewer property-condition restrictions than government programs
Good to know
- Credit and debt-to-income guidelines are firmer than FHA
- PMI applies until you reach the equity threshold
- Loan amounts above conforming limits move you into jumbo territory
- Pricing varies lender-to-lender, shopping matters
Program guidelines, eligibility requirements, and terms vary by lender and change over time. The overview above is educational, not a complete statement of any program’s requirements, an offer of credit, or a commitment to lend. Michael will confirm current guidelines for your exact scenario.
