A practical guide to conventional home loans

Compare the offer in three parts

• Upfront cash: how much will you put down, and what remains due at closing?

• Insurance: does mortgage insurance apply, how is it paid and what are the removal requirements?

• Term: compare the payment and borrowing cost over the time you expect to keep the loan. Conventional and conforming are not interchangeable terms.

What does “conventional” mean?

A conventional loan isn’t insured or guaranteed by a federal housing agency. Some follow conforming loan standards; others have different requirements. Ask which program is behind the offer you’re looking at.

Conventional loans can be used for buying or refinancing. Your credit, income, savings, intended use of the home and the property itself affect the choices available.

Compare the down payment and insurance together

You don’t always need a large down payment for a conventional purchase. Putting less down means borrowing more, and mortgage insurance may add to the cost. Look at the monthly payment and upfront cash together.

Find out how the insurance is paid and when it may be removed. Check the loan rules and the servicer’s requirements before assuming it will end on a particular date.

Choose a term you can live with

A longer term spreads repayment across more months. A shorter one repays the balance sooner but changes the payment. Compare what you can comfortably pay with the interest cost over the time you expect to keep the loan.

Have the lender put the options in writing. Use the same loan amount, timing and assumptions when comparing them.

Bring your budget to the conversation

Tell us your price range, what you’ve saved and how you plan to use the home. We’ll explain conventional loans alongside other options you can consider. Final approval still requires a full loan and property review.