In short
A conventional loan is a mortgage that follows Fannie Mae and Freddie Mac guidelines rather than being backed by FHA, VA or USDA. Eligible buyers can put as little as 3% down, there's no set minimum credit score with a Fannie Mae DU approval (620 if manually underwritten), and private mortgage insurance can be removed once you reach 80% loan to value.
Reviewed by Scottie Campbell, NMLS #1610726 · Last updated October 18, 2026
What is a conventional loan, and is it right for me?
A conventional loan is a mortgage that follows Fannie Mae and Freddie Mac guidelines instead of being backed by FHA, VA or USDA. Eligible buyers can put down as little as 3%, and with a Fannie Mae DU approval there's no set minimum credit score (620 if the file is manually underwritten). Private mortgage insurance applies under 20% down, but unlike FHA it can come off once you reach 80% loan to value. It's often a strong fit for buyers with steady income and solid credit, and it works for primary homes, second homes and investment properties. I'll run a Total Cost Analysis so you can compare it against your other options side by side.
Key takeaways
Most people think a conventional loan means perfect credit and 20% down. Quite frankly, that idea keeps a lot of good families renting longer than they need to. I'm Scottie Campbell, and I've been helping people buy homes since 2003. On this page I'll show you how conventional loans actually work, who they fit, and how I help you decide with confidence.
What a Conventional Loan Really Is
A conventional loan is a mortgage that isn't insured or backed by a government agency like FHA, VA or USDA. Instead, it follows the guidelines set by Fannie Mae and Freddie Mac. Quite frankly, it's the workhorse of the mortgage world, and it fits far more people than most folks assume.
A lot of buyers I talk with in Georgetown, TX have heard that conventional is only for people with perfect credit and 20% down. That's not true, and it keeps good families on the sidelines longer than they need to be.
My job is to educate and empower you. Your job is to decide. So let me walk you through how this loan works, where it shines, and where another program might serve you better.
How Much Do You Need to Put Down?
You do not need 20% down. Eligible buyers, especially first-time buyers, can put down as little as 3%. Here's how down payment changes the picture:
- 3% to 5% down: Common for first-time buyers. Private mortgage insurance (PMI) applies.
- 5% to 19.99% down: Very common for move-up buyers. PMI applies, and the amount generally drops as your down payment rises.
- 20% or more down: No PMI at all.
Your down payment can also come from gift funds from family, within program rules, and in some cases from a down payment assistance program (more on that below).
Credit Scores: It's Never a No, It's Always a How
Here's something that changed recently. Fannie Mae removed its 620 credit score floor on November 16, 2025. What that means for you is this:
- With a Fannie Mae DU approval: there is no set minimum credit score. The automated system looks at your whole file, not one number.
- If your file is manually underwritten: the minimum is 620.
- If mortgage insurance is required: a minimum score still applies from the mortgage insurance side.
So if you've had a rough patch, don't count yourself out. Can't do it now doesn't mean can't do it ever. If today isn't the day, I'll build you a Mortgage Action Plan with clear steps to get you there, and we'll check in along the way.
PMI: The Part That Goes Away
On a conventional loan, PMI is not forever. Once your loan balance reaches 80% of your home's original value, you can ask to have it removed, and it drops off automatically at 78% under federal law. Extra principal payments or a rise in your home's value (confirmed by an appraisal, within the servicer's rules) can get you there sooner.
That's a real difference from FHA, where mortgage insurance often lasts the life of the loan unless you refinance. For a lot of buyers with decent credit, I kinda like conventional for exactly this reason: the cost structure improves the longer you own the home.
Conventional vs. FHA at a Glance
| Conventional | FHA | |
|---|---|---|
| Backed by | Fannie Mae / Freddie Mac guidelines | Federal Housing Administration |
| Minimum down | 3% for eligible buyers | 3.5% at 580+ credit |
| Mortgage insurance | PMI, removable at 80% loan to value | MIP, often for the life of the loan |
| Property types | Primary, second home, investment | Primary residence only |
| Property condition | Standard appraisal | FHA condition standards apply |
Neither one is always better. It depends on your credit, your down payment and how long you plan to keep the home. That's where a Total Cost Analysis comes in.
Why I Look at Total Cost, Not Just the Rate
Everyone asks about the rate first. Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
But the rate is only one piece. My Total Cost Analysis compares down payment, mortgage insurance, closing costs and how long you'll realistically own the home, side by side across your options. Sometimes putting 5% down and keeping cash in reserve is the smarter move. Sometimes a bigger down payment is. We'll look at the numbers together, and you decide.
Down Payment Assistance on Conventional Loans
Most banks don't offer many assistance programs. I have access to dozens. Conventional options include:
- National: Gold Star Advantage, Within Reach Conventional DPA, UWM Conventional 1% Down, Windsor DPA Program, Orion Elevate DPA Grant, Freddie Mac BorrowSmart and HomeFundIt
- Texas: TSAHC Homes for Texas Heroes, TSAHC Home Sweet Texas, TDHCA My First Texas Home, TDHCA My Choice Texas Home, SETH 5 Star Texas Advantage (not available in Travis County) and Travis County HFC Hill Country Home DPA
- Florida and Ohio: Florida Housing programs including Florida Hometown Heroes (subject to annual funding), plus OHFA Down Payment Assistance and Ohio Heroes
DPA availability depends on property location, income limits and loan type, and eligibility is confirmed program by program. I'll tell you straight which ones you actually qualify for.
Why Work With Waymaker Mortgage Company on a Conventional Loan
Funded in house, underwritten by many investors. Waymaker Mortgage Company closes and funds conventional loans in its own name, with underwriting through multiple investor partners. A bank has one underwriting desk and one set of rules. If one investor's guidelines don't fit your file, I take it to one that does.
Greenlight Approval. I pre-underwrite as many files as possible up front. Greenlight Approval is the highest level of assurance available before you shop, and it can make your offer as strong as cash, sometimes stronger, in the eyes of a seller.
High-tech, high-touch. You get a fast, modern process and a real person who picks up the phone. You're talking to the owner of this company. Feel free to text me.
Let's Get You Rocking and Rolling
If you're buying in Georgetown, TX or anywhere I'm licensed (Texas, Florida, Pennsylvania and Ohio), start with a short conversation. I'll review your scenario, show you where conventional fits, and give you a clear plan. Here to serve.
Information on this page is general and educational. It is not a commitment to lend or an offer of credit. Programs, guidelines and eligibility change and depend on your full scenario. Waymaker Mortgage Company, NMLS 2440476. Equal Housing Lender.
Quick facts
- Loan type
- Conventional (Fannie Mae / Freddie Mac guidelines)
- Minimum credit score
- No set minimum with Fannie Mae DU approval; 620 if manually underwritten
- Minimum down payment
- As low as 3% for eligible buyers
- Mortgage insurance
- PMI under 20% down; removable at 80% loan to value
- Occupancy
- Primary residence, second home or investment property
- Funding
- Funded in house by Waymaker Mortgage Company, underwritten through multiple investors
Is this loan right for you?
Who it's for
- First-time buyers with steady income who can put 3% or more down
- Move-up buyers who want mortgage insurance that eventually goes away
- Buyers purchasing a second home or an investment property
- Buyers with solid credit who want to compare total cost against FHA
- Buyers who may qualify for conventional down payment assistance
Who it may not fit
- Buyers whose file needs FHA's more flexible credit and debt guidelines right now
- Eligible veterans or rural buyers who may be better served by 0% down VA or USDA options
- Self-employed borrowers whose tax returns don't show their true income (a bank statement loan may fit better)
Pros and cons
Pros
- As little as 3% down for eligible buyers
- PMI can be removed at 80% loan to value, unlike most FHA loans
- No set minimum credit score with a Fannie Mae DU approval
- Works for primary homes, second homes and investment properties
- Funded in house by Waymaker Mortgage Company with access to multiple investors' guidelines
Trade-offs to weigh
- PMI applies when you put less than 20% down
- Credit and debt guidelines can be less forgiving than FHA for some files
- Down payment requirements are higher for second homes and investment properties
Frequently asked questions
What credit score do I need for a conventional loan?
Fannie Mae removed its 620 floor on November 16, 2025, so with a Fannie Mae DU approval there's no set minimum credit score. If your file is manually underwritten, the minimum is 620, and a minimum still applies when mortgage insurance is required. If your score isn't where you want it yet, I'll build you a Mortgage Action Plan. It's never a no. It's always a how.
Do I really only need 3% down?
Yes, eligible buyers, especially first-time buyers, can put down as little as 3%. Any down payment under 20% comes with private mortgage insurance until you reach the equity threshold. I'll show you how different down payment amounts change your total cost so you can pick what fits your life.
When does PMI come off a conventional loan?
You can ask to remove PMI once your balance reaches 80% of the home's original value, and it drops off automatically at 78%. Extra principal payments, or a rise in value confirmed by an appraisal within your servicer's rules, can get you there sooner.
Should I choose conventional or FHA?
It depends on your credit, down payment and how long you'll keep the home. FHA is often more flexible on credit, while conventional mortgage insurance can be removed and the loan works for second homes and investment properties. My Total Cost Analysis compares both side by side. My job is to educate and empower you. Your job is to decide.
Can I use down payment assistance with a conventional loan?
Often, yes. Options include Gold Star Advantage, Within Reach Conventional DPA, UWM Conventional 1% Down, Freddie Mac BorrowSmart, HomeFundIt, and Texas programs like TSAHC Home Sweet Texas and TDHCA My First Texas Home. Availability depends on property location, income limits and loan type, and eligibility is confirmed per program.
What rate will I get on a conventional loan?
Your rate depends on your scenario and the day's market. Reach out and I'll price it for real. I'll also show you the total cost over the time you plan to own the home, because the rate is only one piece of the picture.
Can I use a conventional loan for a second home or rental?
Yes. Conventional loans can be used for primary residences, second homes and investment properties. Down payment and qualifying requirements differ by occupancy, so we'll walk through what applies to your situation.
Related loan programs
Low down payment options, dozens of down payment assistance programs and a Greenlight Approval that helps your offer compete. It's never a no. It's always a how.
Flexible credit, low down payment, and dozens of assistance programs. I'll show you how FHA fits your plan, then you decide.
No monthly mortgage insurance, no minimum credit score on my end, and VA loans funded in house by Waymaker Mortgage Company with underwriting through multiple investors.
Last updated October 18, 2026 · Reviewed by Scottie Campbell, NMLS #1610726. This page is educational and not a commitment to lend; program details change — ask for current figures.