Conventional Loan
A conventional loan is a mortgage offered by a private lender rather than a government agency. Unlike FHA, VA or USDA loans, conventional loans are not insured or guaranteed by the federal government. Conforming conventional loans may be purchased by Fannie Mae or Freddie Mac, which are government-sponsored enterprises.
A conventional loan could be your perfect fit if you have strong credit and can afford a down payment. A large down payment is not always required, but putting 20% down may help you avoid private mortgage insurance (PMI). Whatever your long- or short-term goals are, a conventional mortgage can help you meet them. CrossCountry Mortgage offers many conventional loan options, including programs for first-time homebuyers and down payment assistance.
Two types of conventional mortgage loans
Conventional loans are generally divided into two main categories: conforming loans and non-conforming loans. Understanding the difference between these types can help you decide which mortgage best fits your financial situation.
Conforming loans
Conforming conventional loans meet the guidelines set by the Federal Housing Finance Agency (FHFA) and are eligible to be purchased by government-sponsored enterprises like Fannie Mae and Freddie Mac. These loans adhere to specific requirements, including limits on the loan amount, credit score minimums and debt-to-income ratios.
For 2026, the maximum conforming loan limit in most areas is $832,750, though some high-cost regions have higher loan limits. Because conforming loans follow standardized rules set by Fannie Mae, they often offer competitive interest rates and terms.
Non-conforming loans
Non-conforming loans do not meet FHFA guidelines, often because they exceed the maximum loan limits or have other unique features. Jumbo loans are a common type of non-conforming loan, used when the loan amount surpasses conforming loan limits. These loans typically have stricter credit score requirements and higher down payments, and they may come with higher interest rates due to the increased risk for lenders. Unlike conforming conventional loans, non-conforming loans are not eligible to be purchased by Fannie Mae or Freddie Mac and are usually held by private lenders or portfolio loans.
Choosing between conforming and non-conforming loans depends on your loan amount needs and financial profile. Your mortgage lender or loan officer can help you understand which option is best suited for your home purchase or refinance.
Fixed-rate vs. adjustable-rate conventional loans
Fixed-rate mortgages
With a fixed-rate mortgage, your mortgage interest rate remains consistent throughout the duration of your loan. You can rest assured knowing your interest rate won’t increase alongside market rates. You may also benefit from refinancing later if market rates decrease. CrossCountry Mortgage offers conventional fixed-rate loans in a variety of term lengths, including 10-, 15-, 20- and 30-year terms.
Adjustable-rate mortgages
An ARM generally has an initial fixed-rate period followed by adjustment periods. After the initial fixed period, the interest rate and monthly payment may increase or decrease. Adjustment caps limit how much the interest rate may change at specified times.
ARMs are available in a variety of configurations and term lengths, with the most common being 5/6, 7/6 and 10/6. The first number in these scenarios represents the number of years your interest rate will remain fixed. The second number represents the period of time in months where your interest rate could change after the fixed period expires. This is called the adjustment period.
Rates may increase or decrease during adjustment periods and make your monthly payments higher or lower, respectively. However, there are caps set on ARMs to protect against rate increases.
Conventional loan options
From buying a home you love to building the house you’ve dreamed of, there are several types of conventional loans to help you get it done.
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Owning a home is more possible than you may think. When you’re ready to buy, there are several conventional loans for purchase, some with little to no down payment required.
- Standard Fannie Mae loan
- Standard Freddie Mac loan
- Fannie Mae HomeReady®
- Freddie Mac Home Possible®
- Freddie Mac HomeOne®
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A refinance is a new loan that replaces an existing mortgage — typically to get more favorable terms or payment options.
- Rate & term refinance
- Cash-out refinance
- Fannie Mae student loan cash-out refinance
- Fannie Mae RefiNow®
- Freddie Mac Refi Possible®
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When you can’t find a house that ticks all the boxes, it’s time to renovate. A renovation loan<https://es.crosscountrymortgage.com/mortgage/loans/renovation/> allows you to customize a home you’re buying, or one you own now.
Fannie Mae HomeStyle®
Freddie Mac CHOICERenovation®
Fannie Mae HomeStyle Refresh®
Freddie Mac GreenCHOICE Mortgages®
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A construction loan is a mortgage to build a home. Our in-house construction team specializes in making the financing hassle-free for you and your home builder so you can focus on what’s important for your new house.
Conventional down payment assistance programs
CrossCountry Mortgage offers programs designed to put homeownership within reach by providing funds for down payments and closing costs. In addition to the programs listed here, there are state, regional and city down payment assistance programs. Your loan officer can help you find local programs. Learn about some of the conventional loan programs options below:
CCM Smart Start
The CCM Smart Start program is designed to help homebuyers with down payment and closing cost assistance, making homeownership more accessible. It offers flexible qualification criteria and supports both first-time buyers and repeat buyers. This program aims to reduce financial barriers and provide a smoother path to purchasing a home with a conventional loan.
The National Down Payment Assistance Program (NDPA)
Offers financial support to eligible homebuyers to help cover down payment and closing costs, making homeownership more accessible. This program is designed to assist low- to moderate-income buyers who might struggle to save enough upfront. By reducing initial payment requirements, NDPA helps more people qualify for a conventional loan and achieve their homeownership goals.
Conventional loan requirements
Credit score requirements vary by conventional loan program. For most programs, eligibility is based on automated underwriting system (AUS) findings rather than a single minimum credit score. Higher credit scores may help borrowers qualify for more favorable interest rates and loan terms.
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Credit score requirements vary by conventional loan program. For most programs, eligibility is based on automated underwriting system (AUS) findings rather than a single minimum credit score. Higher credit scores may help borrowers qualify for more favorable interest rates and loan terms.
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Conventional loans typically require a down payment as low as 3%. If your down payment is less than 20%, you will likely need to pay private mortgage insurance (PMI).
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PMI may be required when a borrower makes a down payment of less than 20%. Depending on the loan and applicable requirements, borrowers may later be eligible to request cancellation of PMI.
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Debt-to-income requirements vary by loan program and borrower profile and may be determined through automated underwriting.
You must provide proof of stable income and employment, typically through pay stubs, tax returns and bank statements.
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The property must meet lender appraisal standards and be in acceptable condition. Conventional loans have less strict property requirements compared to government-backed loans.
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Conforming conventional loan amounts must fall within conforming loan limits. These limits are set by the Federal Housing Finance Agency (FHFA). For 2026, the standard maximum loan amount is $832,750 in most areas, with higher loan limits in certain high-cost regions.
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Lenders will review your credit report to assess your credit history and financial behavior as part of the approval process.
How does a conventional loan work?
When you choose a conventional loan, understanding the process can help you navigate your home purchase or refinance with confidence. Here are the typical steps involved:
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Get prequalified
Start by providing some basic financial information to get an estimate of how much you may qualify for. This step helps you understand your budget and shows sellers you’re a serious buyer.
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Submit a loan application
Once you find a home or decide to refinance, complete a formal loan application with your lender. This includes detailed information about your income, assets, debts and credit history.
You’ll need to submit documents such as pay stubs, tax returns, bank statements and identification to verify your financial situation and ability to repay the loan.
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Loan processing and underwriting
The lender reviews your application and documents to assess your creditworthiness and ensure the loan meets guidelines. This includes ordering an appraisal to confirm the property’s value, which should be in line with the home’s purchase price.
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Loan approval and closing disclosure
After underwriting approval, you’ll receive a closing disclosure outlining your final loan terms, monthly mortgage payments and closing costs.
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Closing
At closing, you’ll sign the loan documents, pay any remaining down payment and closing costs, and finalize your mortgage. After this, the loan is funded, and you become the homeowner or refinance your existing mortgage.
Each of these steps may vary slightly depending on your lender and loan type, but this process gives a clear overview of what to expect when applying for a conventional loan.
Conventional loan FAQs
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Conventional loan credit requirements vary by program, and for most programs eligibility is based on automated underwriting system (AUS) findings rather than a single minimum credit score. Your overall credit profile, income, assets, debts and other factors can affect qualification. A loan officer can help you review the options available for your financial situation.
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Depending on your loan and applicable requirements, you may be eligible to request cancellation of PMI after meeting certain loan-to-value requirements. Contact your loan servicer for applicable eligibility, valuation and documentation requirements.
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Credit unions are one of the types of multiple lenders that offer conventional loans, often providing competitive rates and personalized service.
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Portfolio loans are non-conforming conventional loans held by lenders in their own portfolio instead of being sold to Fannie Mae or Freddie Mac. These loans offer more flexible underwriting but may have higher interest rates.
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Unlike government-backed loans such as FHA, VA or USDA loans, conventional loans are not insured or guaranteed by the federal government. Eligibility requirements vary by loan type.
