Should I Get a Conventional Loan? Who It Fits and What to Weigh

The Most Common Loan, With a Lot of Flexibility

Conventional loans aren't backed by a government agency like FHA, VA or USDA, and they come in many versions, including some low-down-payment options for first-time and moderate-income buyers. For many buyers with solid credit, they're the most cost-effective choice. But not always.

My guide to conventional loans explained covers how they work. This article is about deciding whether one fits you.

When a Conventional Loan Often Makes Sense

Your credit is strong. Conventional pricing and mortgage insurance tend to reward higher credit scores, which can make the loan noticeably cheaper than FHA.

You can put 20% down, or close to it. At 20% down, you generally avoid private mortgage insurance altogether.

You want mortgage insurance that can go away. With less than 20% down, conventional loans usually require PMI, but it can typically be removed once you build enough equity, without refinancing.

The home might not fit FHA or VA standards. Conventional appraisals still look at the property, but some homes that need cosmetic work may be easier to finance conventionally.

You're buying a second home or investment property. FHA and VA are generally meant for homes you'll live in, so conventional is often the route for other property types.

The Tradeoffs to Know About

Credit matters more. With lower credit, conventional pricing and PMI can get expensive, which is when FHA may come out ahead.

Debt-to-income can be stricter. Depending on the file, conventional guidelines can be less forgiving of high debt. See how much mortgage you'll be approved for.

Loan limits. Conforming loan limits apply; larger loans may fall into jumbo territory with different requirements. Your lender can tell you where the current limits sit.

Conventional vs. Your Other Options

If you're VA-eligible, compare VA loans first, since no down payment and no monthly mortgage insurance are hard to beat. If your credit is still building, compare FHA. My side-by-side FHA vs. conventional comparison is the best next read if you're torn between those two.

Questions to Ask Your Lender

What would my rate and PMI be at my credit score and down payment? How does that compare with FHA? When could PMI be removed? Are there low-down-payment conventional programs I qualify for? Can I pair this with Virginia Housing assistance? (See Virginia Housing down payment assistance.)

Let's Find Your Best Fit

For the bigger picture, read what type of mortgage loan should I get?. When you're ready, reach out to me and I'll connect you with a trusted local lender who can run your numbers both ways. Test payments anytime with my mortgage calculator.

This article is general information, not financial advice. Loan rules, mortgage insurance, credit requirements and pricing change and vary by lender, so confirm current details and your specific options with a licensed lender.