Conventional Mortgages

A conventional mortgage loan is a “conforming” loan, which simply means it meets the requirements for Fannie Mae or Freddie Mac (government-sponsored enterprises that purchase mortgages from lenders and sell them to investors). These loans are designed to be more affordable and accessible for borrowers, making them a popular choice in the U.S. housing market.  Conventional mortgages are the most common mortgage in the U.S. (82% conventional vs 18% FHA, VA & USDA).

One of the defining features of a conventional conforming loan is its loan limit, which is updated annually. In 2025, the conforming loan limit for a single-family home in most areas is $806,500, although it can be higher in high-cost areas, like San Francisco or New York City, where it reaches up to $1,209,750.

Eligibility for a conventional conforming loan typically requires a good credit score—generally above 620—along with a stable income and a suitable debt-to-income ratio, usually capped at 43% but can top out at 49% with extenuating circumstances. This means that your total monthly debts should not exceed 43% of your gross monthly income. For example, if your gross earnings are $10,000 a month, your total debts should ideally not surpass $4,300.

These loans also offer flexibility in terms of terms and conditions. Borrowers can choose fixed-rate mortgages with amortization schedules ranging from 10 to 30 years. The 30-year fixed mortgage is most common. Additionally conventional conforming loans can also be an adjustable-rate mortgages (ARMs), traditionally rates on ARMs are slightly less than rates for fixed rate mortgages.  However, in recent times rates on ARMs have not been as attractive. 

Typically, conventional loans offer lower costs and more attractive rates than other loan types. If you meet credit score requirements and want a down payment of as low as 3%, a conventional mortgage may be the best solution for you.  They often require private mortgage insurance (PMI) if the down payment is less than 20%. However, once the homeowner builds equity, they can usually cancel PMI, reducing monthly payments.

In summary, a conventional conforming loan is a reliable option for many homeowners, providing competitive rates, manageable eligibility criteria, and flexibility in repayment terms. It's an excellent pathway for any home buyer or those looking to refinance their homes.