A conventional loan can give you more flexibility in how you structure a home purchase, especially if you want some flexibility in how much cash you use upfront and how much you finance over time.
For buyers in Washington and Oregon, NW Capital Mortgage can show you how conventional financing would work for the home you want to buy and whether another loan program or down payment assistance would leave you in a better position.
A conventional loan is a mortgage that is not backed by a government program such as FHA, VA, or USDA. Instead, many conventional loans follow Fannie Mae or Freddie Mac guidelines.
Conventional financing can give qualified buyers more choices. Stronger credit or a larger down payment may improve the loan terms you can access. If Private Mortgage Insurance (PMI) was required, you may be able to remove PMI later. Conventional loans can work for some second homes and investment properties as well as a primary residence.
To qualify for a conventional loan, your lender looks at your financial picture. Your income and monthly debts help determine how much you can borrow, while your credit history and available funds can affect the loan terms and down payment options available to you.
The property matters, too. The home, how you plan to use it, and the amount you need to borrow all help determine which conventional loan options apply.
NW Capital Mortgage can look at those pieces together and show you what conventional financing would look like for your purchase in Washington or Oregon.
Start Your Pre-ApprovalNo single credit score qualifies you for a conventional loan. A stronger score can improve your interest rate and PMI options, while a lower score can make conventional financing more expensive even if you still qualify.
For some buyers, conventional financing works well. For others, FHA financing may be a better path because of how credit and mortgage insurance work. We walk you through all your options so you can find the best fit.
Your credit can have a real effect on what the loan costs, and not just whether you're approved.
A conventional loan does not automatically require a large down payment. Some programs allow qualified buyers to purchase with as little as 3% down, but the amount you need depends on the loan program, your qualifications, and the property you are buying.
Your down payment can affect whether you pay PMI and what your monthly payment looks like, which is why it helps to compare your options.
No. 20% is not a universal down payment requirement for a conventional loan.
A larger down payment can reduce the amount you need to finance, but putting less down may allow you to buy sooner or keep more of your savings available for other purchase costs.
Yes. Conventional loans are available to both first-time buyers and people who have owned a home before.
If this is your first purchase, don't assume that FHA is your only low-down-payment option. Conventional financing may offer an even better path depending on your credit, income, and available funds.
Yes. Some qualified buyers can pair an eligible conventional first mortgage with down payment assistance.
NW Capital Mortgage works with Washington and Oregon assistance programs. We'll look at the first mortgage and assistance together, so you can see how much help may be available, what you would need at closing, and how the combined financing works.
Private mortgage insurance is commonly required when a conventional loan finances more than 80% of the home's value. It adds to the monthly housing payment, so it is one of the costs to understand when deciding how much to put down.
That doesn't mean that putting 20% down is always the right choice. Some buyers prefer to use less cash upfront and accept the additional monthly cost rather than wait longer to buy or use more of their savings.
One advantage of conventional PMI is that you may be able to remove it.
For many conventional mortgages on a primary residence, you can request cancellation of PMI once the loan balance reaches 80% of the home's original value, provided that you meet the applicable requirements. PMI generally terminates automatically when the loan balance is 78% of the value of the home when the loan was originated. You also need to be current on your mortgage payments.
Removing PMI can lower the monthly payment without refinancing.
FHA and conventional loans can both provide low down payment purchase financing, but they qualify borrowers and handle mortgage insurance differently.
| FHA Loan | Conventional Loan |
|---|---|
| Can provide more flexibility for some buyers with credit challenges. | Stronger credit may improve available pricing and mortgage insurance terms. |
| Qualified borrowers may purchase with a down payment as low as 3.5%. | Some qualified borrowers may have conventional options with as little as 3% down. |
| Uses FHA mortgage insurance. | Uses private mortgage insurance when the down payment is less than 20%. |
| Primarily designed for owner-occupied homes. | May finance a primary residence, eligible second home, or investment property. |
| Subject to FHA loan limits. Generally lower than Conventional Conforming loan limits. | Conforming loans are subject to applicable conforming loan limits. |
The best way to compare is to look at both loans for the same purchase situation. How much would you need at closing? What would the full monthly payment be after mortgage insurance? And what financing do you qualify for?
NW Capital Mortgage can run FHA and conventional scenarios using your purchase price and financial information, so you can compare the differences side by side rather than choosing based on a general rule of thumb. Learn more about FHA loans in Washington and Oregon.
Start Your Pre-ApprovalYes. One advantage of conventional financing is that it is not limited to a home you will use as your primary residence. It may also be available for an eligible second home or investment property.
A home you plan to live in as your main residence. Conventional financing offers a range of options for qualified buyers.
An eligible vacation home or another property you intend to use personally but will not occupy as your primary residence.
An eligible rental property or another home purchased for investment purposes, subject to applicable financing requirements.
You may be able to buy a vacation home, a rental property, or another home you will not occupy full time. The financing works differently depending on how you plan to use the property, so the down payment and other qualification requirements may change.
If you are considering one of these properties, tell us how you plan to use it from the beginning so we can show you the conventional options that apply.
What Are the Conventional Loan Limits in Washington and Oregon?
Conforming loan limits set the maximum loan amount that can follow standard Fannie Mae or Freddie Mac guidelines. Limits vary by year, location, and property type.
If you need to borrow more than the applicable limit, you may need a jumbo loan, which can come with different qualification and reserve requirements.
A fixed rate mortgage keeps the same interest rate for the life of the loan. An adjustable rate mortgage typically starts with a fixed rate for a set period, but then can change based on the terms of the loan.
The difference matters because an ARM may offer attractive initial terms, but you need to understand when the rate can adjust, how much it can change, and whether you are likely to still have the loan when those adjustments begin.
With a fixed-rate mortgage, your interest rate stays the same for the life of the loan. That makes the principal-and-interest portion of your payment predictable and can be useful if you expect to keep the mortgage for a long time.
An adjustable-rate mortgage, or ARM, usually keeps the rate fixed for an initial period and then allows it to change according to the loan terms.
An ARM may be worth considering if you don't expect to keep the mortgage long term, but the starting rate shouldn't be your only consideration. You also need to understand when the rate can change and what that could mean for your future payment.
A conventional loan can look simple until you start deciding how much to put down, whether paying PMI is worth it, or whether conventional financing actually comes out ahead of FHA or another loan for the home you want.
At NW Capital Mortgage, we work with buyers throughout Washington and Oregon and can walk you through how each loan program impacts your closing costs and monthly payments.
We also work with Washington and Oregon down payment assistance programs, so if assistance is part of your purchase, we can evaluate it together with the conventional first mortgage rather than treating it as a separate decision.
If conventional financing is the better fit, we will make sure you understand why. And if another loan gives you a better path to the same home, you will be able to see that comparison before you choose.
Compare conventional financing options and take the next step toward your home purchase.
Start Your Pre-Approval