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Conventional Mortgage Finder

Do Fannie Mae and Freddie Mac have your back? Find out if a conventional loan is right for you.

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Name Product Loan products offered State availability Min. credit score
Rocket Mortgage
Not rated yet
Rocket Mortgage
Conventional, Jumbo, FHA, VA, Refinance
Available in all states
Apply online for free and lock in your rate for 90 days.
Veterans United
Not rated yet
Veterans United
Conventional, FHA, VA, USDA, Jumbo, Refinance
Available in all states
Veterans United stands out from other lenders for its focus on serving the military community.

Conventional loans are one of the fastest and most popular ways to purchase a home. But you’ll need to meet strict lending criteria, and you may need to purchase private mortgage insurance if your down payment is less than 20%.

How conventional loans work

A conventional mortgage loan is any conforming or nonconforming loan that isn’t secured by the federal government.

Private lenders like banks, mortgage companies and credit unions offer both fixed-rate home loans and mortgages with adjustable rates alike.

Conforming vs. nonconforming conventional loans

Conforming loans meet the funding criteria of Fannie Mae and Freddie Mac and fall below the Federal Housing Finance Agency’s (FHFA) annual dollar limit. As of 2020, this limit is set at $510,400 in most states, but it can be higher in high-demand metropolitan housing markets such as Alaska, Hawaii, Guam and the US Virgin Islands.

Nonconforming loans, often in the form of jumbo loans, offer loan amounts higher than the FHFA limit. They help you access more money to purchase an expensive home. But they’re riskier for lenders and have higher interest rates than conforming loans. To qualify, borrowers typically need a credit score of 700 or higher and should be prepared with a down payment of at least 20%.

How to compare conventional loan lenders

Compare lenders based on:

  • Rates. Consider both the actual interest rate and the APR, which is the cost of the loan with fees and other costs factored in.
  • Closing costs. Mortgage closing costs can vary significantly between lenders.
  • Reviews. Check both professional reviews on Finder and customer reviews on sites like the BBB and Trustpilot to find out more about the service you can expect from a lender.
  • Qualification criteria. Check each lender’s minimum credit score and debt-to-income ratio to figure out if you’re likely to be approved.

The conventional mortgage process

While other factors may affect someone applying for a conventional loan, the overall process generally follows these steps:

  1. Compare lenders. Start by comparing conventional mortgage lenders to find one that fits your needs. Decide whether you’d like to work with a direct lender — such as a community bank or a credit union — or a broker, which acts as an intermediary between the borrower and the lender.
  2. Get preapproved. Most lenders offer preapproval online, which can give you an idea of whether your application will be approved. If your preapproval is denied, you’ll need to compare other lenders.
  3. Find a house. Look for a house within the budget set by your preapproval.
  4. Apply. The application process varies by lender, but you’ll generally get information on how to apply after you’ve completed the preapproval process.
  5. Submit supporting documents. This usually includes proof of identity, tax documents, bank statements, W-2s and paystubs.
  6. Get insured. While your lender may suggest an insurer, you can also choose your own to get better rates and service. Compare homeowners insurance to find a policy that fits your needs and budget.
  7. Close the loan. Depending on your lender, you may need to meet in person to sign the documents.

Do I qualify for a conventional loan?

When determining your mortgage rate, lenders are interested in more than just your credit score. Here are a few other factors your lender consider:

  • Debt-to-income ratio. Your debt-to-income ratio (DTI) is the percentage of your monthly income that goes toward debt. To qualify for a conventional loan, you’ll need a DTI of no more than 43%.
  • Verified income. Lenders want to ensure you have the funds to cover your down payment and closing costs. So expect to provide proof of income and assets with pay stubs, W2s, asset account statements and tax returns from the past two years.
  • Derogatory credit. If you’ve ever filed for bankruptcy or foreclosure, your lender considers both the length of time and circumstances surrounding the event. While this may affect the rate you’re offered, it won’t necessarily disqualify you from financing.

Credit score requirements

You might qualify for a conventional loan with a credit score as low as 620, but requirements may vary depending on the lender you choose.

Generally speaking, the higher your credit score, the better your mortgage rate. The best rates are reserved for borrowers with FICO scores above 740.

Costs and fees

Costs of taking out a conventional loan include:

  • Down payment. Depending on your lender, you may need a down payment of anywhere from 3% to 20% of the home’s value.
  • Private mortgage insurance. If your down payment is less than 20% of the home’s value, your lender may require private mortgage insurance.
  • Closing costs. Closing costs vary, but typically cost about 2% to 5% of the mortgage’s total value. These can include:
    • Application fees. Some lenders charge a fee to apply. But many lenders offer free preapproval, so you can compare lenders ahead of time and get an idea of the amount you’ll be approved for.
    • Appraisal fee. Having a home appraised usually costs around $300 to $500 and is required by most lenders.
    • Discount points. Some lenders will let you pay money up front in order to reduce the interest rate on your loan.
    • Other lender and third-party fees. Before you close on your loan, your lender will give you a closing disclosure that goes over all of the costs and fees associated with the loan.

Conventional loans pros and cons


  • Lower fees. Conventional loans often come with lower fees than government loan programs, like FHA loans.
  • Flexible purchase options. You can use a conventional loan to buy a primary residence, vacation home or investment property.
  • Fast processing times. Conventional loans can often be closed faster than government-backed loans.


  • Harder to qualify for. You’ll generally need a higher credit score for a conventional loan than you’d need for an FHA loan.
  • Purchase limits. If you need to purchase a home above a certain amount, $510,400 in 2020, you’ll need a jumbo loan. These have even stricter lending criteria and aren’t offered by all lenders.

What other loan options do I have?

  • FHA loan. FHA home loans are backed by the Federal Housing Administration. Lenient lending criteria such as qualifying credit scores as low as 580 and low down payment options of just 3.5% make this program a popular option for first-time home buyers.
  • VA loan. Backed by the US Department of Veterans Affairs, veteran-designed VA loans, service members and qualifying family members. VA loans offer no-down-payment options, no prepayment penalties and no insurance premiums for qualifying members.
  • USDA loan. The US Department of Agriculture mortgage program was designed for low- to medium-income borrowers looking to purchase a home in a rural area. USDA loans are down-payment deferrable, but borrowers may need to invest in private mortgage insurance (PMI).

Bottom line

Conventional loans offer both fixed- and adjustable-rate terms to help you finance the purchase of your home. But they also have stricter lending criteria than government-backed loans. Find out more about mortgages and if a conventional loan is for you.

Frequently asked questions

What is mortgage prequalification?

If you’re interested in applying for a mortgage, getting prequalified is a helpful first step. By supplying your potential lender with information about your income, assets and debt, your lender can let you know what size loan you qualify for. Most lenders don’t charge for prequalification and can help you navigate the next steps in the borrowing process.

What’s the difference between a conventional loan and an FHA loan?

FHA loans accept borrowers with credit scores as low as 580 and down payments as low as 3.5%. While eligibility criteria for FHA loans are less stringent than that of conventional loans, mortgage insurance is required, which can make them more expensive than a conventional loan in the long run.

What is private mortgage insurance?

Private mortgage insurance (PMI) is a form of insurance that protects private lenders should a borrower default on their loan. PMI is often required of borrowers who make down payments of less than 20% on conventional loans.

This insurance is typically added to your monthly mortgage payment as a premium. You can usually cancel your PMI once you’ve accumulated at least 20% equity in your home.

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