Conventional Mortgages

Conventional loans fit a wide range of borrowers: first-time buyers, move-up buyers, second-home buyers, and investors. There’s no first-time-buyer requirement in general, though some 3% down options require at least one first-time buyer or income at or below a set share of area median income (Fannie Mae 97% options, HomeReady, Home Possible).

• Loan amount within the 2026 conforming limit: $832,750 for one unit in most counties (higher for 2–4 units and in designated high-cost areas). Larger loans are generally called jumbo loans and follow separate lender rules.
• Steady, documentable income and a manageable debt-to-income ratio.
• Funds for down payment, closing costs, and any reserves the lender requires.

Fannie Mae’s Eligibility Matrix sets maximum loan-to-value (LTV) ratios. Converted to a minimum down payment, the general standards are:

• Primary residence, one unit: 3% with a fixed rate for eligible borrowers (5% with an ARM).
• Primary residence, 2–4 units: 5%.
• Second home: 10%.
• Investment property: 15% for one unit, 25% for 2–4 units.

Gifts from eligible donors can help on a primary residence or second home (B3-4.3-04). Sellers can contribute toward closing costs within set limits (from 2% to 9% depending on down payment and occupancy).

Fannie Mae’s minimum credit score is 620 for manually underwritten fixed-rate loans and 640 for ARMs. Loans run through its automated system are evaluated on the full set of risk factors instead of a single cutoff (B3-5.1-01). Lenders may set their own higher minimums.

Your score affects more than approval. On conventional loans it usually affects both the rate and the PMI premium, so a modest score improvement can change the payment.

Self-employed borrowers typically document income with two years of personal (and sometimes business) tax returns; Fannie Mae allows a shorter history in some cases (B3-3.2-01).

With less than 20% down, lenders usually require private mortgage insurance (CFPB). It can be paid monthly, upfront, or built into the rate, depending on what the lender offers.

For most borrower-paid PMI on a primary home, you can request cancellation once the balance reaches 80% of the original value, and it generally ends automatically at 78% if you’re current (CFPB).

1. Which 3% or 5% down options might I fit, and what would I need to document?
2. How do my credit score and down payment change the rate and the PMI premium?
3. What PMI payment options are available, and when could PMI come off?
4. How does a conventional estimate compare with FHA for my numbers?
5. Is my target price within the conforming loan limit for my county?