Conventional loans with low down payments and removable PMI
Conventional loans follow Fannie Mae and Freddie Mac guidelines and are the most common mortgage in the country. With good credit they often cost less than FHA, and they work for primary homes, second homes and investment properties across Southwest Florida.
What is a conventional loan?
A conventional loan is a mortgage that is not insured by a government agency and usually follows Fannie Mae or Freddie Mac guidelines, with down payments starting at 3% for eligible first-time buyers. With less than 20% down you pay private mortgage insurance (PMI), which you can ask to remove once you reach 20% equity and which ends automatically at 22% based on the original schedule. Loans above the yearly conforming limit are jumbo loans with their own rules.
Talk it through with a licensed loan officer. No credit pull to ask questions. NMLS # 226100.
- Down payment
- 3% for eligible first-time buyers, 5% for most other primary homes, 10% for second homes, 15% for a single-unit rental
- Credit score
- Usually 620 or higher; stronger scores get better pricing
- Mortgage insurance
- PMI under 20% down; removable at 20% equity, automatic at 22% on the original schedule
- Seller help
- Up to 3% of the price with under 10% down on a primary home, and more with a larger down payment
- Loan limits
- Set each year by the FHFA; larger loans are jumbo
- Property types
- Primary homes, second homes, investment properties and warrantable condos
What you need for a conventional loan
Standard documentation, reviewed by an automated underwriting system and a human underwriter.
- Two years of income history. Pay stubs, W-2s and possibly tax returns, or two years of returns if self-employed.
- A credit score of 620 or higher. Higher scores lower your rate and your PMI cost.
- Down payment and reserves. Two months of bank statements; gifts from family are allowed on primary homes.
- A reasonable debt-to-income ratio. Automated underwriting can approve higher ratios with strong credit and savings.
Conventional loans for the way Southwest Florida buys
Second homes, condos and rentals are a big part of this market, and conventional loans cover them all.
Second homes
Buying a winter place in Cape Coral or Fort Myers? Second-home loans start at 10% down with pricing close to a primary home.
Condo reviews
Conventional loans review the condo association's budget, reserves and insurance. Florida's condo safety laws make that review more important.
Insurance escrows
Wind and flood premiums are part of your payment and your debt-to-income ratio. We get quotes early so your approval holds.
From first call to closing, step by step
Check your options
A quick call about your credit, income, savings and the home you want.
Get pre-approved
Apply securely online for a pre-approval letter backed by automated underwriting.
Lock your rate
Once you are under contract, we lock the rate and order the appraisal.
Close
We coordinate title, insurance and your agent through closing day.
Conventional loan questions, answered
Straight answers. If yours isn't here, call or send it through the form below.
What is the minimum down payment for a conventional loan?
Eligible first-time buyers can put 3% down on a primary home through programs like Fannie Mae HomeReady and Freddie Mac Home Possible, which have income limits. Most other primary-home buyers need 5% down.
When does PMI come off a conventional loan?
You can ask your servicer to remove PMI when your balance reaches 80% of the home's original value, if your payment history is good. It ends automatically at 78% of the original value on the original schedule.
What credit score do I need for a conventional loan?
Most conventional loans require a score of at least 620. Higher scores get better rates and lower PMI, so small credit improvements before you apply can save real money.
Is conventional or FHA better?
With a credit score above about 680, conventional often costs less because PMI is cheaper and can be removed. With lower scores or recent credit events, FHA can be the better fit. We price both.
Can I use a conventional loan for a second home or rental?
Yes. Second homes typically need at least 10% down and single-unit investment properties at least 15%, with pricing based on the property type and your credit.
What is a conforming loan limit?
It is the maximum loan size Fannie Mae and Freddie Mac will buy, set each year by the Federal Housing Finance Agency. Loans above it are jumbo loans with different requirements.
See what you qualify for with a conventional loan
Share your credit range, income and savings. We will compare conventional and FHA and show you the lower total cost.
- Phone
- (239) 634-6685
- Serving
- Cape Coral, Fort Myers and Southwest Florida
- NMLS
- Company 2371310 · Loan Officer 226100
