Conventional loans: flexible financing for many buyers

How conventional loans work

Lenders generally underwrite conforming conventional loans to Fannie Mae or Freddie Mac standards, reviewing credit, income, assets and the property. Loans above conforming limits are jumbo loans, covered on a separate page.

If your down payment is below the threshold set by guidelines, you'll typically pay private mortgage insurance (PMI). Unlike FHA mortgage insurance, PMI can usually be removed once you build enough equity.

Who conventional fits

• Buyers with solid credit and documented income
• Buyers who want PMI that can be removed later
• Second home buyers and investors
• Refinancers looking to drop FHA mortgage insurance

Loan options

Fixed-rate and adjustable-rate terms, purchase, rate-and-term refinance and cash-out refinance. Some conventional programs are designed for first-time or moderate-income buyers.

Documents you may need

Pay stubs, W-2s, tax returns if self-employed, bank statements, ID and information on debts. Requirements vary by lender.

Pros and cons

Pros: May be used for primary, second and investment homes; PMI can usually be removed once guideline requirements are met; flexible terms; no upfront government fee.

Cons: Credit guidelines can be stricter than FHA; conforming limits apply; income must be documented in the standard way.

Conventional vs. FHA

FHA may be more flexible on credit. Conventional PMI can usually be removed once you build enough equity, while FHA mortgage insurance may last longer. Which costs less over time depends on your credit, down payment and how long you keep the loan. We can compare both side by side.

Fixed or adjustable?

A fixed-rate conventional loan keeps the same principal and interest payment for the life of the loan. An adjustable-rate loan starts with a set period and then can change. Adjustable loans can suit people who expect to sell or refinance before the adjustment period, while fixed loans offer predictability. Ask how and when any adjustment works before you choose.

How Turn Times helps

Turn Times is a licensed mortgage broker, not a lender. Instead of offering one company's products, we compare conventional loan options from wholesale lenders and walk you through the differences in plain language. Here's how it usually goes:

1. Tell us your goal. A short conversation about the property, your timeline and what matters most to you.
2. We search pricing across wholesale lenders. We look at which wholesale lenders' guidelines may fit your situation, and a licensed loan officer compares their pricing and terms.
3. You choose. We lay out the trade-offs so you can pick the option that works for you.
4. We manage the loan to closing. Appraisal, title, conditions and updates along the way.

Every loan is subject to the lender's underwriting, and approval isn't guaranteed. We arrange loans for properties in California and Colorado.

Frequently asked questions