What is a conventional loan?

A conventional loan is a mortgage not backed by a government agency. It follows guidelines set by Fannie Mae and Freddie Mac. Most home purchases use conventional loans. They require 3–20% down and a credit score of 620 or higher.

What credit score do I need for a conventional loan?

The minimum credit score is 620 for most conventional loans. However, a score of 720+ gets you the best rates. Each 20-point improvement in your credit score can reduce your rate by 0.125–0.25%, saving thousands over the loan term.

When does PMI go away on a conventional loan?

PMI automatically cancels when your loan balance reaches 78% of the original home value. You can request cancellation at 80% LTV. You can also eliminate PMI faster by making extra payments or refinancing once you have 20% equity.

What is the minimum down payment for a conventional loan?

3% for first-time homebuyers (Fannie Mae HomeReady, Freddie Mac Home Possible). 5% for repeat buyers. 20% to avoid PMI. Conventional loans offer more flexibility than you might think on down payments.

How does a conventional loan compare to FHA?

Conventional loans have stricter credit requirements but cheaper mortgage insurance that eventually goes away. FHA has easier qualification but charges MIP for the life of the loan (if down payment < 10%). With a 680+ credit score, conventional is usually the better deal.

Conventional Loan Calculator

Calculate your monthly conventional mortgage payment with PMI based on your credit score. See when PMI drops off and your full PITI breakdown.

Home Price

Down Payment

$20%

Interest Rate

Loan Term

Credit Score

Total Monthly Payment

$2,422

$1,972 P&I

Principal & Interest: $1,972

Property Tax: $333

Insurance: $117

Loan Amount

$304,000

LTV Ratio

80.0%

PMI Rate

None

Total Interest

$405,826

Total Loan Cost

$709,826

How to Use This Conventional Loan Calculator

Enter your home price, down payment, interest rate, and credit score to see your complete monthly payment including PMI if applicable.

Credit Score Impact

Your credit score directly affects two things: the interest rate you qualify for and the PMI rate you'll pay if your down payment is under 20%. The calculator adjusts PMI rates based on your selected credit score tier. A 760+ score gets the best rates and lowest PMI.

PMI Removal Timeline

The calculator shows how many months until PMI is removed (when you reach 80% LTV through normal amortization) and the total amount you'll pay in PMI. This helps you decide whether to put more down to avoid PMI entirely.

More Options

Click "More options" to add property tax, homeowners insurance, and HOA fees for a complete PITI payment estimate.

Conventional Loan Payment Formula

Monthly P&I = P × [r(1+r)^n] / [(1+r)^n - 1]

Monthly PMI = (Loan Amount × Annual PMI Rate) ÷ 12
PMI applies when LTV > 80%

LTV = Loan Amount ÷ Home Price × 100

Typical PMI Rates by Credit Score:
760+: 0.2–0.6% · 720–759: 0.3–0.9% · 680–719: 0.5–1.2%
Below 680: 0.8–1.5%

Example: $380,000 home, $76,000 down (20%), 6.75%, 30 years. LTV = 80% exactly — no PMI. Monthly P&I = $1,974. With 10% down ($38,000), LTV = 90%, PMI adds ~$95/mo for ~9 years, costing ~$10,260 total in PMI.

Example: Comparing Down Payment Scenarios

$380,000 Home at 6.75% — 30-Year Conventional

Same home, different down payment strategies:

Scenario	3% Down	10% Down	20% Down
Down Payment	$11,400	$38,000	$76,000
Loan Amount	$368,600	$342,000	$304,000
Monthly P&I	$2,391	$2,219	$1,974
Monthly PMI (est.)	$221	$95	$0
Total Monthly	$2,612	$2,314	$1,974
PMI Removed In	~14 yrs	~9 yrs	N/A

Putting 20% down saves $340/month vs. 10% down, and $638/month vs. 3% down. The 20% scenario also avoids $10,000+ in total PMI payments over the life of the loan.

Frequently Asked Questions

A conventional loan is any mortgage not insured or guaranteed by the federal government. Unlike FHA, VA, or USDA loans, conventional loans are originated and backed by private lenders and conform to guidelines set by Fannie Mae and Freddie Mac. They're the most common type of mortgage, accounting for about 65% of all home loans.

The minimum credit score is 620 for most conventional loans. To get the best rates, aim for 740+. Each tier improvement saves money: going from 680 to 720 might reduce your rate by 0.25%, saving $19,000 on a $300K 30-year loan. Work on your credit score for 6–12 months before applying if possible.

PMI on a conventional loan automatically cancels when your loan balance reaches 78% of the original purchase price (not current value) through normal amortization. You can request removal at 80% LTV — call your lender and they may require an appraisal. You can also eliminate PMI faster by making extra principal payments or by refinancing when you have 20% equity (especially if home values have risen).

In 2024, the conforming loan limit is $766,550 for single-family homes in most areas, and up to $1,149,825 in high-cost areas. Loans above these limits are jumbo loans and have different qualifying requirements. If your loan amount exceeds the limit, consider our Jumbo Loan Calculator.

It depends on your credit score and down payment. With a 680+ credit score, conventional is usually better because PMI eventually goes away (FHA MIP is usually permanent with <10% down) and rate pricing is competitive. With a score below 640, FHA may be your only option. With 20% down, conventional is always better — no mortgage insurance at all.