Understanding Conventional Loans
A conventional loan is a mortgage that isn't insured or guaranteed by a federal agency. Most follow the guidelines set by Fannie Mae and Freddie Mac, which keeps them widely available and makes them the most common home loan in the country.
Conventional financing works for a primary residence, a second home or a rental property, with fixed-rate and adjustable-rate options. It's often the most cost-effective choice for borrowers with solid credit.
Who it's a good fit for
- Buyers with steady income and established credit
- Purchasers of second homes, like a cabin in Stevens County or a place near Lake Roosevelt
- Investors buying one-to-four unit rental property
- Homeowners refinancing out of an FHA loan to drop its mortgage insurance
Key details
- Conforming loan limits are set each year by the Federal Housing Finance Agency. Loans above that limit are called jumbo loans and have their own guidelines.
- Smaller down payments usually require private mortgage insurance (PMI). Unlike FHA insurance, conventional PMI can generally be cancelled once you've built enough equity.
- Approval looks at credit history, debt-to-income ratio, assets, and the property's value and condition.
Conventional questions
Can I remove mortgage insurance on a conventional loan?
Usually, yes. PMI on a conventional loan can generally be cancelled at your request once your balance reaches a set share of the home's original value, and it ends automatically at a later point. Your loan documents spell out the details.
Is a conventional loan better than FHA?
It depends on your credit, down payment and plans for the property. Borrowers with stronger credit often pay less over time with conventional financing, while FHA can be more forgiving. Jake can price both side by side for you.
Can I use a conventional loan for a rental property?
Yes. Conventional financing is available for one-to-four unit investment properties, with stricter requirements than for a primary residence.
Conventional financing around Eastern Washington
- Spokane, WA: A good fit for move-up buyers on the South Hill and in Liberty Lake with strong credit.
- Pullman, WA: Common for faculty and staff relocating to Pullman, sometimes qualifying with a signed offer letter.
- Tri-Cities, WA: Common for new construction in West Richland, south Kennewick and west Pasco.
- Walla Walla, WA: A fit for historic downtown homes and second homes for wine-country visitors.
- Whitman County, Washington: Works for farmhouses and in-town homes, with attention to acreage and outbuildings.
- Franklin County, Washington: Fits move-up buyers in west Pasco and rural Columbia Basin homes.
- Adams County, Washington: Works well for established buyers and rural homes in good condition.
- Garfield County, Washington: Works for in-town Pomeroy homes and rural properties in good condition.
- Lincoln County, Washington: Covers primary homes for Spokane commuters and second homes near Lake Roosevelt.
- Stevens County, Washington: Covers year-round lake homes and second homes at Loon and Deer lakes.
- Ferry County, Washington: Works for rural homes with reliable power, water and heat.
- Pend Oreille County, Washington: Covers waterfront primary homes and second homes on the river and lakes.
Related programs
FHA Loans
Government-insured loans with flexible credit guidelines and a lower down payment requirement.
Learn moreVA Loans
Home loans for eligible veterans, service members and surviving spouses, guaranteed by the Department of Veterans Affairs.
Learn moreFirst-Time Homebuyer Programs
Guidance, loan options and down payment assistance for buyers purchasing their first home.
Learn moreInformation on this page is general and educational. Loan approval, terms and eligibility depend on your full application, credit, property and current program guidelines.