Lake State Mortgage home
Text Shelby

Shelby Weller

Mortgage Loan Officer

The Industry Standard

Conventional Loans

The most popular mortgage option. Put as little as 3% down, drop mortgage insurance entirely at 20%, and buy anything from a primary residence to an investment property.

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3%
Minimum Down Payment
620+
Minimum Credit Score
Cancellable
Mortgage Insurance
Yes
Second Homes Allowed

Why go Conventional?

Conventional loans are not insured by the government (like FHA or VA). Because the lender takes on more risk, they require stronger credit scores, but offer far more flexibility in return.

  • Cancel Your PMIUnlike FHA, Conventional Private Mortgage Insurance (PMI) isn't permanent. Once you reach 20% equity in your home, the PMI drops off, instantly lowering your payment.
  • Any Property TypeFHA and VA loans require you to live in the home. Conventional loans can be used to buy second homes, vacation homes, and investment properties.
  • Stronger OffersSellers often prefer conventional offers over FHA/VA because conventional appraisals aren't as strict regarding minor property repairs.

Down Payment Tiers

3% Down

Available for first-time homebuyers only (haven't owned a home in 3 years).

5% Down

The standard minimum for repeat buyers. Requires monthly PMI.

10% Down

Significantly reduces your monthly PMI premium and strengthens your offer.

20% Down

The gold standard. Avoids PMI entirely and unlocks the absolute best interest rates.

Conventional Loan FAQs

While the technical minimum is 620, conventional loans are highly credit-sensitive. A borrower with a 620 score will pay a much higher interest rate and PMI premium than a borrower with a 740 score. If your score is under 680, FHA might be cheaper.

Conventional loans must "conform" to limits set by Fannie Mae and Freddie Mac. For most of Michigan in 2026, the limit is $832,750 for a single-family home. Loans above this amount require a Jumbo loan.

Yes, but with caveats. If you are putting down 20% or more, it can all be a gift. If you are putting down less than 20% on a second home or investment property, part of the down payment must be your own money. For primary residences, the entire 3% or 5% can often be gifted.