Conventional Loans

Conventional loans are mortgage loans offered by non-government sponsored lenders. A conventional, or conforming, mortgage adheres to the guidelines set by Fannie Mae and Freddie Mac. It may have either a fixed or adjustable rate.

What is a Conventional Loan?

Conventional loans are loans that are not insured nor guaranteed by the federal government. There are two types of categories that pertain to conventional mortgages; “conforming” and “non-conforming.” Conventional loans relatively tend to conform to certain loan lending requirements established by Fannie Mae and Freddie Mac. Usually, borrowers whom are looking to qualify with this loan program must have a good credit history, meet specific credit score criteria, and debt to income ratio requirements.

Borrowers looking into this program often think that they are required to put 20% in down payment, but that is not the case. Down Payment options can typically start as low as 3% depending on Fannie Mae and Freddie Mac guidelines and your current situation. If a borrower makes a down payment of less than 20% of the purchase price, private mortgage insurance (PMI) is required. This insurance policy recompenses the lender the difference between the 80% Loan-to-Value should the loan ever go into default. Once the loan reaches the 78% Loan-to-Value, private mortgage insurance would then be automatically cancelled.

Conforming vs. Non-Conforming Loans

Conventional loans are split into two types: conforming and non-conforming.


  • Must meet Fannie Mae and Freddie Mac underwriting guidelines
  • Median Fico Score of 620 or higher
  • Must meet standard conforming loan limits; generally, $453,100


  • Not bought by Fannie Mae nor Freddie Mac.
  • Above the conforming loan limit of $453,1000, typically known as “jumbo” loans; therefore, higher loan amounts available
  • Stricter credit qualifying criteria
  • Typically used to buy a more expensive home and high-end custom construction homes

Benefits of Conventional Loans

  • Doesn’t have to be owner occupied; down payment options differ for investment properties
  • No mortgage insurance required if 20% or more is put in down payment
  • No mortgage insurance once loan has been paid down to 78% loan-to-value
  • Adjustable-rate and fixed-rate loan terms available

Conventional Loan Limits

Different counties have different limits on how much you can borrow for a Conventional Loan.

Get Pre-Approved for a VA Loan

If you are looking to purchase a home in Chicago, including suburbs such as Plainfield IL, Naperville, Schaumburg IL, or anywhere in the entire state of Illinois, contact Zachary Kraus Mortgage Lending Team at Success Mortgage Partners, Inc at (630) 230-8602 for more information, or simply fill out the form on this page.