Conventional Loans

A conventional mortgage is not insured or guaranteed by a federal government program such as FHA, VA, or USDA. Many conventional loans are “conforming,” meaning they are structured to meet current Fannie Mae or Freddie Mac purchase requirements. Conventional loans above the applicable conforming limit or outside standard agency guidelines are non-conforming loans.

• Conforming loans: Loan amounts and features must satisfy current agency and lender requirements.
• High-balance conforming loans: Higher limits can apply in designated high-cost California counties.
• Non-conforming or jumbo loans: Requirements and pricing can vary significantly by lender.

Conventional financing is not automatically cheaper or easier than a government-backed loan. Credit, income, debts, assets, occupancy, property type, loan-to-value, mortgage insurance, and market pricing all affect the result. Strategic Home Loans compares conventional financing with FHA, VA, and jumbo loan options when applicable.

There is no universal conventional down-payment requirement. It depends on the loan program, occupancy, property type, borrower profile, and automated or manual underwriting results.

• Certain eligible primary-residence transactions can allow down payments as low as 3%, while other borrowers or properties require more.
• A down payment below 20% commonly requires private mortgage insurance (PMI). The PMI cost depends on factors such as credit, loan-to-value, coverage, and insurer pricing.
• A down payment of at least 20% generally avoids borrower-paid PMI on a conventional purchase loan, but it does not eliminate closing costs, prepaid items, or reserves.
• Second homes, investment properties, multi-unit properties, and some condominiums commonly require larger down payments or additional reserves.
• Refinance equity requirements vary with occupancy, loan purpose, property type, and the selected program.

PMI cancellation rules depend on the loan and applicable law. Review the loan terms and the CFPB’s PMI cancellation guidance.

Conventional financing can be available for several property and occupancy types, subject to the selected program and lender requirements:

• Single-family primary residences, second homes, and investment properties.
• Eligible two-to-four-unit properties.
• Condominiums and planned unit developments that satisfy applicable project, insurance, budget, litigation, and property-review standards.
• Certain manufactured homes that meet program, title, foundation, and property requirements.

California borrowers should also consider county conforming loan limits, particularly in higher-cost areas. FHFA updates those limits annually; use the official conforming loan-limit resource rather than relying on an old dollar amount.

Strategic Home Loans is a California mortgage brokerage based in Westlake Village (Company NMLS #340445). Start with a conventional loan pre-approval, review our Mortgage FAQ, or contact Strategic Home Loans for a property-specific review.