Conventional home loans with as little as 3% down
A conventional loan is a mortgage that is not insured by FHA, VA, or USDA. It is the most common purchase and refinance option for buyers with solid credit. Many programs allow 3–5% down on a primary home, and private mortgage insurance (PMI) can usually be canceled once you build enough equity.
NMLS #1660690 · Reviewed by UMortgage+
Key facts
Figures below are typical industry ranges for education. Exact overlays, credit floors, and limits change and must be confirmed with a loan officer against current NEXA Lending guidelines and your scenario.
| Minimum down payment (typical) | About 3% for qualified first-time / low-down programs; ~5% otherwise; ~10–25% common for second homes and investment property (confirm current overlays). |
|---|---|
| Credit score (typical range) | Often mid-600s+ for approval; stronger scores improve pricing. Lender overlays apply. |
| Debt-to-income (DTI) | Automated underwriting may allow the mid-40% range or higher with compensating factors; manual underwriting is stricter. |
| Mortgage insurance | PMI usually required under 20% down; typically cancelable near 80% LTV when you request it and are current. |
| Loan limits | Up to the conforming limit for your county (see ). Above that = jumbo. |
| Occupancy | Primary, second home, and investment (rules and down payment differ). |
Who it's best for
- Buyers with mid-to-strong credit who want cancelable PMI
- First-time buyers using 3% down programs
- Move-up buyers and refinance clients staying under conforming limits
- Borrowers who may gift funds or use down payment assistance compatible with conventional
Who should look elsewhere
- Very thin or challenged credit where FHA pricing or guidelines fit better
- Eligible veterans who can use 0% down VA
- Properties or credit events that fail conventional overlays but fit Non-QM or government programs
Pros and cons
Pros
- Cancelable PMI (unlike most FHA loans)
- Competitive pricing for stronger credit scores
- Flexible occupancy and property types within guidelines
- Works with many state and local assistance programs
Cons
- Stricter credit and appraisal standards than some government loans
- PMI until you reach roughly 20% equity
- Investment and second-home down payments are higher
- Loan-level pricing adjustments can raise cost for lower scores or high LTV
How it works in 4 steps
Discovery call or apply
Share your goals, credit picture, and timeline. We check which programs and pricing scenarios fit.
Compare side by side
See rate, payment, cash to close, and mortgage insurance options before you choose.
Underwriting
We lock when you're ready, order any needed appraisal, and clear conditions.
Close & fund
Sign documents and fund. We stay in touch with you and your agent or title company.
Illustrative payment on a $300,000 purchase
Assume a $300,000 purchase price, 5% down ($15,000), loan amount $285,000, 30-year fixed. Using a sample note rate of 6.5% (placeholder only—not today's rate): principal & interest is about $1,801/month before taxes, insurance, and PMI.
On a $400,000 purchase with 5% down ($20,000), loan amount $380,000 at the same sample 6.5%: P&I is about $2,401/month before taxes, insurance, and PMI.
Not a rate quote, APR disclosure, or commitment to lend. Actual rates, points, and payments depend on credit, occupancy, property, lock period, and market conditions on the day you lock. Ask a loan officer for a personalized Loan Estimate.
Frequently asked questions
Do I need 20% down for a conventional loan?
No. Many conventional purchase loans allow as little as 3% down for qualified first-time buyers (for example HomeReady or Home Possible style products) and 5% for other borrowers. Putting 20% down avoids monthly PMI, but it is not required to qualify.
When does PMI come off a conventional loan?
On most conventional loans you can request PMI cancellation once your loan balance reaches about 80% of the original value (or current appraised value on some refinance paths), and servicers must automatically terminate PMI at about 78% under federal rules when you're current. Ask your servicer for the exact request process.
What credit score do I need for conventional?
Many lenders look for mid-600s and up for automated approval, with better pricing at 740+. Exact overlays vary by lender and by whether the loan is HomeReady/Home Possible, second home, or investment. Soft-pull quotes help you see where you land without a hard inquiry.
Conventional vs. FHA: which is better?
Conventional often wins if you have stronger credit and can put at least 3–5% down, because PMI is cancelable and pricing can be better at higher scores. FHA can win with thinner credit or smaller down payments and gift funds, but FHA mortgage insurance usually lasts longer. We compare both on payment and cash to close.
How much house can I afford with a conventional loan?
Underwriters look at debt-to-income, credit, reserves, and the property. A rough consumer rule of thumb is keeping total housing near 28–36% of gross income, but automated underwriting may allow higher. A pre-approval beats any rule of thumb.
Can I buy a condo or 2–4 unit with conventional financing?
Yes, if the condo project is warrantable (or you use a non-warrantable investor product) and 2–4 unit properties meet occupancy and down-payment rules. Investment properties typically need larger down payments than primary residences.
Educational content only. Guidelines change. Confirm details with UMortgage+ powered by NEXA Lending, LLC, before you apply.
See your conventional loan options
Get a personalized quote from a loan officer or call (480) 233-7897.