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Conventional Loans
The most popular mortgage in America—and for good reason. Competitive rates, flexible terms, and the ability to drop mortgage insurance once you build equity. Whether you're buying your first home or your fifth, conventional is the go-to.
Who Is This Loan For?
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✅ Buyers who want to avoid permanent mortgage insurance
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✅ Second home and investment property purchasers
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✅ Homeowners looking to refinance for a better rate
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✅ Borrowers with stable W-2 income and solid credit history
What Is a Conventional Loan?
A conventional loan is a mortgage that's not backed by a government agency like FHA or VA. Instead, it follows guidelines set by Fannie Mae and Freddie Mac—the two largest mortgage investors in the country.
Because there's no government insurance, conventional loans typically require stronger credit and a slightly larger down payment than FHA. The upside? Lower overall costs, no upfront mortgage insurance, and the ability to remove PMI once you reach 20% equity.
At Team Malik, we operate as both a direct lender and a mortgage broker, which means we can shop multiple investors to find you the most competitive conventional rate available. We use proprietary AI technology approved by Fannie Mae and Freddie Mac to streamline your approval and keep the process simple.
Licensed in Florida, New Jersey, and Pennsylvania—no market or property type exclusions.
Conventional Loan Requirements
Credit Score
620 minimum to qualify. 740+ gets you the best rates and terms. Most of our first-time buyers fall in the 640–720 range and still get excellent options.
Down Payment
As low as 3–5% for primary residences. Put 20% down and you skip PMI entirely. The down payment can come from savings, gifts, or down payment assistance programs.
Debt-to-Income Ratio (DTI)
Standard guideline is 43–45%. In some cases, we can go up to 50% with strong compensating factors like high reserves or excellent credit. We follow the 28/36 housing-to-debt guideline as a benchmark.
Employment & Income
Two years of employment history. W-2 income is straightforward. Self-employed? You may want to look at our Bank Statement Loan program instead.
Property Types
Primary residences, second homes, and investment properties all qualify. Single-family, condos, townhomes, and multi-unit (up to 4 units).
Private Mortgage Insurance (PMI)
If you put less than 20% down, you'll pay PMI—a monthly premium that protects the lender. Here's the good news:
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PMI is temporary. Once you reach 20% equity, you can request removal.
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At 22% equity, your servicer is required to remove it automatically.
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No upfront premium—unlike FHA's 1.75% upfront MIP.
PMI typically costs 0.3%–1.5% of the loan amount annually, depending on your credit score and down payment. On a $300,000 loan, that's roughly $75–$375/month.
Pro tip: Many of our clients start with 5% down, build equity over 2–3 years, then request PMI removal. It's a smart strategy to get into a home sooner without overpaying long-term.
Conventional vs. FHA: Which Is Better?
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If your credit is 620+ and you can put 5% or more down, conventional usually wins on total cost. If your credit is below 620 or you need maximum flexibility, FHA might be the better path. Not sure? Book a call and we'll run both scenarios for you.
The Conventional Loan Process
Step 1 — Pre-Approval.
We review your income, assets, credit, and debts. You'll receive a pre-approval letter typically within 1–2 business days. This tells sellers you're a serious, qualified buyer.
Step 2 — Home Search.
Find your home. Your pre-approval letter shows sellers and agents exactly what you qualify for.
Step 3 — Appraisal.
Once you're under contract, we order an appraisal to confirm the home's value supports the loan amount.
Step 4 — Underwriting.
Our team processes your file through underwriting. We handle the heavy lifting—you just respond to any document requests promptly. Typical timeline: 2–3 weeks.
Step 5 — Closing.
Sign your paperwork, pay closing costs (typically 2–5% of the loan amount), and get the keys. Total timeline: 21–35 days from application to closing. Need to move faster? Ask about our 25-day guaranteed close option.
Frequently Asked Questions
What credit score do I need for a conventional loan?
620 is the minimum. You'll qualify for better rates at 680+, and the best rates at 740+. Most of our borrowers fall somewhere in the 640–720 range.
How much do I need for a down payment?
As little as 3–5% for a primary residence. 20% eliminates PMI. Investment properties typically require 15–25% down.
What is PMI and how do I get rid of it?
Private Mortgage Insurance is required when you put less than 20% down. You can request removal once you reach 20% equity, and it's automatically removed at 22%. Unlike FHA mortgage insurance, PMI is not permanent.
Can I use a conventional loan for an investment property?
Yes. Conventional loans work for primary residences, second homes, and investment properties. Down payment requirements are higher for investment properties (typically 15–25%).
How long does the process take?
Our average is 21–35 days from application to closing. We also offer a 25-day guaranteed close option if you need to move quickly.
Can I use gift funds for my down payment?
Yes. Conventional loans allow gift funds from family members for the down payment. There are specific documentation requirements—we'll walk you through it.
Explore Other Loan Options
FHA Loans → Low down payment and flexible credit. Great for first-time buyers.
DSCR Loans → Qualify on rental income. Built for investors.
Bank Statement Loans → Self-employed? Use your deposits to qualify.