Although it asks for a higher credit score and a sizable down payment, a conventional mortgage loan may be the perfect way to finance your home — stable rates, real flexibility, and no government program fees.
3% down
minimum for qualifying first-time buyers
620 score
the credit score to aim for
Up to 9%
of the home's price the seller can pay toward closing costs, depending on your down payment
The Basics
Conventional mortgage loans are part of a loan program unique to private lenders — banks, credit unions, and mortgage companies. Because no government agency controls them, no agency can charge fees on them either.
Most conventional mortgage loans have fixed rates that do not change during the life of the loan, although some are adjustable-rate mortgages. Many buyers are drawn to these loans because interest rates stay stable in the midst of unpredictable times.
Two Categories
While conventional mortgage loans are the same by nature, a few key differences set them apart. Fannie Mae and Freddie Mac set dollar limits on conventional loans — for 2026, the conforming loan limit is $832,750 for most of the continental United States. Where your loan falls relative to that limit determines its category.
| Feature | Conforming | Non-Conforming |
|---|---|---|
| Loan size | Stays under the $832,750 limit | Exceeds the Fannie Mae & Freddie Mac limits |
| Terms | Falls within Fannie Mae & Freddie Mac terms and conditions | Set by the individual lender |
| Best for | Most home buying situations | Luxury homes that need greater loan capacity (jumbo loans) |
| Example | A $600,000 loan on a Phoenix home | A $900,000 jumbo loan |
From Jimmy
Three Key Advantages
Among the countless financing options available, conventional mortgage loans offer key advantages that make them a wise home loan decision.
Other programs such as VA Home Loans only allow the purchase of a primary residence. Conventional mortgage loans give you greater versatility — invest in a home to sell in the future, or buy a vacation home for your family.
While FHA loans require lifetime mortgage insurance, conventional home loan participants only need it temporarily. Once your balance reaches 80% of the home's original value, you can ask to drop PMI — and at 78%, it ends automatically.
Because private lenders lead conventional mortgage loans, home buyers are protected from hidden government fees. Government-sponsored programs apply funding fees instead — VA Home Loans, for example, carry a 1.25% to 3.3% funding fee.
Eligibility
Three conversations decide a conventional approval: the money you bring, the credit you've built, and the size of the loan. Here's each one, honestly.
Twenty percent down is an option, not a requirement: first-time buyers start at 3%. And the seller can pay up to 9% of your closing costs on top, scaled to your down payment.
Seller-paid closing costs: up to 3% / 6% / 9% at under 10%, 10–24%, and 25%+ down.
A 620 FICO score qualifies; a stronger score earns a better rate and cheaper mortgage insurance. Your monthly debts, including the new mortgage, should stay under half your gross income.
Put down less than 20% and PMI joins the payment until you reach 20% equity; then it's gone. Conforming rules cover loans up to the 2026 limit; above that you're in jumbo territory.
Close on one of these but not all? That's normal, and usually workable.
Talk through your numbersQuestions
A conventional loan is a mortgage that comes from a private lender, like a bank, credit union, or mortgage company, rather than being backed by a government program such as FHA or VA. Because no government agency is involved, there are no government program fees added to your loan.
Most conventional loans come with a fixed rate, so your principal and interest payment stays the same for the life of the loan. That stability is a big part of why so many of my Phoenix clients choose them.
Jimmy's team will map your down payment scenario in one honest conversation — no pressure, no obligation.
Why Conventional
For those who can fund a sizable down payment and have a good credit score, conventional mortgage loans can be an excellent financing solution — suited for families who are ready to purchase their dream home. When simplified, conventional home loans are not as intimidating as they seem.
Luminate Bank works to simplify the home loan process so you can get to homeownership. We serve our clients and partner with them every step of the way. Give us a call, or visit our Phoenix office in person — we would be honored to assist you.
A track record you can verify
James Vercellino was listed among Scotsman Guide's 2026 Top Originators.
