Contact Info
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Address: 26305 Jefferson Ave., Ste. H Murrieta, CA 92562
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Phone: (951) 370-1925
Conventional Loans
The most popular mortgage option for buyers with solid credit. Flexible terms, competitive rates, and no government red tape.
OVERVIEW
What Is a Conventional Loan
A conventional loan is a mortgage that isn’t backed by a government agency like the FHA, VA, or USDA. Instead, it’s offered by private lenders and typically follows guidelines set by Fannie Mae and Freddie Mac.
Conventional loans are the most common type of mortgage in the United States — and for good reason. They offer flexible terms, competitive interest rates, and the ability to avoid mortgage insurance once you reach 20% equity.
Whether you’re buying your first home, upgrading to a larger property, or purchasing a second home or investment property, a conventional loan gives you options that government-backed loans don’t always provide.
Benefits
Why Choose a Conventional Loan?
No Upfront Mortgage Insurance
Unlike FHA loans, conventional loans don’t require an upfront mortgage insurance premium. With 20% down, you avoid PMI entirely.
PMI Cancellation
If you do pay PMI initially, it automatically cancels once you reach 22% equity — or you can request removal at 20%.
Flexible Property Types
VA loans consistently offer lower interest rates than conventional loans, even for borrowers with imperfect credit.
Competitive Rates
Borrowers with good credit often qualify for the lowest available interest rates with conventional financing.
Higher Loan Limits
Conforming loan limits are higher than FHA limits in most areas, with jumbo options for properties that exceed them.
Faster Processing
Without government agency involvement, conventional loans often close faster — important in competitive markets.
Eligibility
Do You Qualify?
Conventional loan requirements are straightforward. Here’s what lenders typically look for:
| Requirement | Standard | Notes |
|---|---|---|
| Credit Score | 620+ minimum | 740+ for best rates |
| Down Payment | 3% minimum | 20% to avoid PMI |
| Debt-to-Income | 43-45% maximum | Lower is better |
| Employment | 2 years history | Consistent income preferred |
| Reserves | 2+ months | Varies by loan amount |
Don’t meet every requirement? Don’t worry — there’s flexibility. Your loan officer can review your full financial picture and find solutions. Many buyers qualify with scores in the 620-700 range, and down payment assistance programs can help with upfront costs.
IS THIS RIGHT FOR YOU?
Conventional Loans Are Ideal For…
Scenario 1: Strong Credit Buyers
If your credit score is 700+, you’ll likely qualify for the best conventional rates — often lower than government loan options.
Scenario 2: 20% Down Payment Ready
Putting 20% down eliminates PMI from day one, reducing your monthly payment and total loan cost.
Scenario 3: Second Home or Investment Buyers
Unlike FHA and VA loans (which require owner-occupancy), conventional loans finance vacation homes and rental properties.
Scenario 4: Higher Loan Amounts
Need to borrow more than FHA limits allow? Conventional conforming limits are higher, with jumbo options above that.
Compare
How Does a Conventional Loan Compare?
| Feature | VA Loan | Conventional | FHA |
|---|---|---|---|
| Min. Down Payment | 3% | 3.5% | 0% |
| Min. Credit Score | 620 | 580 | No minimum* |
| Mortgage Insurance | Removable at 20% | Life of loan (most cases) | None (funding fee instead) |
| Property Types | Primary, 2nd home, investment | Primary only | Primary only |
| Loan Limits | Higher conforming limits | Lower limits | No limit |
| Eligibility | Anyone who qualifies | Anyone who qualifies | Veterans/military only |
Rates shown are for informational purposes only and are subject to change without notice. Actual rates may vary based on credit score, loan amount, loan-to-value ratio, property type, occupancy, and other factors. Rate information is current as of and may have changed since publication. All loans are subject to credit and property approval. Contact a 21st Century Lending loan officer for a personalized rate quote. APR reflects the total cost of credit as a yearly rate. NMLS #241835. Equal Housing Lender.
Note: Most VA lenders require 620+
The right loan depends on your situation. VA loans are unbeatable for eligible veterans. FHA works well for buyers with lower credit. But for most buyers with solid credit and some savings, conventional loans offer the best combination of flexibility and long-term value.
Not sure which is right?
THE PROCESS
From Application to Keys
Get Your COE
15-20 min
Complete your application and upload documents.
Underwriting
1-2 weeks
We verify your information and review your file.
Appraisal
3-7 days
An independent appraiser confirms the home’s value.
Lock Your Rate
Same day
Secure your interest rate while we finalize approval.
Close
Same day
Sign final documents and get your keys.
Most conventional loans close in 30-45 days from application.
Conventional Loan FAQs
Frequently Asked Questions
Q1: What’s the minimum down payment for a conventional loan?
As little as 3% for qualified first-time homebuyers through Conventional 97 or HomeReady programs. Standard conventional loans require 5% down. Putting 20% down eliminates PMI.
Q2: What credit score do I need?
The minimum is typically 620, but you’ll get better rates with higher scores. Borrowers with 740+ scores qualify for the best conventional rates available.
Q3: How is PMI calculated?
PMI typically costs 0.5-1% of your loan amount annually, divided into monthly payments. The exact cost depends on your down payment, credit score, and loan-to-value ratio.
Q4: Can I use a conventional loan for a rental property?
Yes. Conventional loans can finance investment properties, though you’ll typically need a larger down payment (15-25%) and may pay a slightly higher rate.
Q5: What’s the difference between conforming and non-conforming loans?
Conforming loans meet Fannie Mae/Freddie Mac guidelines and fall within their loan limits. Non-conforming (jumbo) loans exceed those limits and have different requirements.
Q6: Can I get a conventional loan if I’m self-employed?
Yes. You’ll need to document your income with 2 years of tax returns. Some borrowers qualify for bank statement loans if traditional documentation doesn’t reflect their true income.
Q7: What are the 2024/2025 conventional loan limits?
Conforming loan limits change annually. For most areas, the 2024 limit is $766,550 for a single-family home. High-cost areas have higher limits. Contact us for current limits in your area.
Q8: How long does it take to close on a conventional loan?
Most conventional loans close in 30-45 days. Because there’s no government agency involvement, processing can be faster than FHA or VA loans.
Ready to Get Started?
See what you qualify for in minutes — no commitment, no obligation.