A conventional loan is a type of mortgage that is not backed by any government agency, such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), or the U.S. Department of Agriculture (USDA). Instead, these loans are offered by private lenders—such as banks, credit unions, or mortgage companies—and may be sold to government-sponsored enterprises like Fannie Mae or Freddie Mac.
Credit Requirements: Conventional loans typically require a higher credit score than government-backed loans. Most lenders prefer a minimum credit score of 620, but a score of 740 or higher can help borrowers secure better interest rates.
Down Payment: While the minimum down payment for a conventional loan can be as low as 3%, a down payment of 20% or more can help borrowers avoid paying private mortgage insurance (PMI).
Loan Limits: Conventional loans must fall within conforming loan limits, which vary by location. In 2025, the baseline conforming loan limit is $766,550 in most areas, though it can be higher in more expensive regions.
Flexibility: These loans are available for a wide variety of property types, including primary residences, second homes, and investment properties.
Lower overall borrowing costs compared to some government loans (especially if the borrower has a high credit score).
More flexibility in terms of loan terms and repayment schedules.
No upfront mortgage insurance premiums, unlike FHA loans.
Stricter credit and income requirements, which may make it harder to qualify.
PMI required if the down payment is less than 20%.
Less favorable terms for borrowers with lower credit scores or high debt-to-income ratios.
We've been helping customers afford the home of their dreams for many years and we love what we do.
Sterling Mortgage Services
CA BROKER NMLS
Company NMLS: 1460556 | CalBRE ID: 01376997
Licensed Only In: CA
www.nmlsconsumeraccess.org
Sterling Mortgage Services
Folsom, CA 95630
Phone: (855) 870-7334
info@sterlingmortgagehomeloans.com
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