A conventional loan is a mortgage that is not insured or guaranteed by a government agency like FHA, VA or USDA. Most conventional loans are "conforming," meaning they follow Fannie Mae and Freddie Mac guidelines and stay under the conforming loan limit for the county. They are the most common mortgage in the country and usually the least expensive option for borrowers with solid credit and at least a few percent down.
Who a conventional loan suits
- Credit in good shape. Pricing improves in steps as your score rises, so strong credit is rewarded more directly than on FHA.
- At least 3% to 5% down. Some first-time and income-eligible buyers can put 3% down. See How Much Down Payment Do I Need?.
- Buyers who want mortgage insurance that ends. PMI on a conventional loan can be removed. FHA insurance often cannot. See What Is PMI and How Do I Get Rid of It?.
- Second homes and investment properties. FHA and VA are for primary residences. Conventional financing covers all three occupancies.
- Condos in projects that meet Fannie or Freddie standards, which is a different and sometimes easier test than FHA's project approval. See FHA Condo Approval in Arizona.
Who it may not suit
- Lower scores. Below roughly the high 600s, conventional pricing and mortgage insurance can climb fast, and FHA can be cheaper. See FHA vs Conventional in Arizona.
- Higher ratios with thin files. FHA's automated underwriting can be more forgiving.
- Recent credit events. Waiting periods after bankruptcy, foreclosure and short sale are generally longer on conventional loans.
- Eligible veterans, who should always compare VA first. See VA vs FHA vs Conventional.
Conforming vs jumbo
The conforming loan limit is set each year by the Federal Housing Finance Agency. In Maricopa County, a loan above the limit is a jumbo loan, with its own underwriting, reserves and pricing. The limit changes every year, so check the current figure on the FHFA site or ask your lender. See the Scottsdale Jumbo Loan Guide.
How underwriting works on a conventional file
Most conventional loans run through Desktop Underwriter (Fannie Mae) or Loan Product Advisor (Freddie Mac). The system weighs your score, ratio, reserves, down payment and loan type together. That is why a borrower with a higher ratio and strong reserves can be approved while a borrower with a lower ratio and no savings is not. The findings come with a list of required documents, and the file closes when every one is satisfied. See How Mortgage Underwriting Works.
Some files receive an appraisal waiver, where the agency accepts the value without a full appraisal. You cannot request one; the system offers it or does not.
What changes your price on a conventional loan
- Credit score band.
- Loan-to-value, meaning how much you put down.
- Occupancy: primary, second home or investment.
- Property type: condos and two-to-four unit homes price differently.
- Cash-out on a refinance.
- Points or credits you choose. See Are Mortgage Points Worth It?.
Each of those is a line on a pricing grid, and they stack. Ask your lender which adjustments are hitting your file and which ones you can change.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out which program actually costs you less
FHA, conventional and jumbo price the same borrower very differently once the mortgage insurance is compared across the years you will own the home. Tell me the shape of your file and I will run them side by side.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
