Loan Products · January 12, 2025
Conventional Loans: The Complete 2025 Guide
Conventional loans are the most popular mortgage in America. Here is everything you need to know about qualification, costs, and why they are often the smartest long-term choice.
Conventional loans represent the majority of mortgages originated in the United States. They follow guidelines set by Fannie Mae and Freddie Mac and offer flexible terms for a wide range of borrower profiles.
2025 Conforming Loan Limit
$766,550 for most counties. High-cost areas up to $1,149,825. Loans above these limits require a jumbo mortgage.
Minimum Requirements
Credit score: 620 minimum (680+ for best rates). Down payment: as low as 3% (certain programs), 5% standard, 20% to avoid PMI. DTI: up to 45-50% with compensating factors. Employment: typically 2 years of stable history.
Mortgage Insurance: The Key Variable
With less than 20% down you will pay PMI. Unlike FHA MIP, conventional PMI cancels. Automatic cancellation at 78% LTV (federal law). Request cancellation at 80%. Cancel via appraisal if home values increased sufficiently. PMI typically costs 0.5-1.5% annually.
Who Conventional Is Best For
Credit score above 680, down payment of 10%+ for faster PMI elimination, buyers of second homes or investment properties, buyers who want to cancel MI eventually, buyers of properties in any condition (less strict than FHA).
Working with HMS means we shop your conventional loan across 15+ wholesale lenders. Call 309-222-8286.