Understand your down payment options, mortgage insurance, and how conventional financing compares with other loan programs.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency. It can be used to purchase or refinance a primary residence, second home, or investment property, subject to program requirements.
Many lenders offer conventional loans. The options depend on your finances and the property. Some eligible homebuyers can purchase with as little as 3% down, making conventional financing an option worth exploring even if you haven’t saved a 20% down payment.
At Platinum Lending Solutions, we help Oregon and Washington borrowers compare conventional loans. We look at your income, credit, cash on hand, and plans for the home.
How Do Conventional Loans Work?
Most conventional mortgages are conforming loans. They follow lending rules set by Fannie Mae or Freddie Mac. Other conventional mortgages, including certain jumbo loans, have different lender-specific guidelines.
Loan eligibility and terms generally depend on:
- Credit history and overall financial profile
- Documented income and employment
- Existing monthly debt obligations
- Available assets and down payment
- Property type and intended occupancy
- Applicable loan limits and lender requirements
A conventional mortgage may have a fixed or adjustable interest rate. Available loan terms and pricing vary by lender, program, and borrower qualifications.
How Much Down Payment Do You Need?
You do not automatically need 20% down to qualify for a conventional mortgage.
Some conventional loan programs permit down payments as low as 3% for eligible borrowers purchasing a primary residence. Other programs have different minimums. These depend on the property, how you will use it, and your finances.
A larger down payment can reduce the loan amount, monthly payment, and potential mortgage insurance costs. Putting more money down may not suit every household.
Think about the cash you will need after closing. Set aside funds for repairs, home upkeep, and unexpected bills.
We can compare down payment options side by side. You can see the estimated monthly payment and cash needed to close for each one.
What Are the Benefits of Conventional Financing?
Flexible Property Options
Eligible conventional financing can be used for primary residences, second homes, and investment properties. Down payment, reserve, and underwriting requirements vary by property and occupancy type.
Multiple Down Payment Programs
Depending on eligibility, borrowers may have access to conventional programs with lower down payment requirements. Certain programs also permit eligible gift funds or other approved sources of down payment assistance.
Mortgage Insurance Cancellation
Conventional loans with private mortgage insurance (PMI) may provide opportunities to cancel that insurance when applicable requirements are satisfied.
Different Loan Terms and Structures
Borrowers can evaluate different repayment terms and, where available, fixed-rate or adjustable-rate options based on their financial circumstances and plans for the property.
Purchase and Refinance Options
Conventional financing can be used for home purchases, refinancing an existing mortgage, and certain cash-out refinance transactions, subject to eligibility.
Do Conventional Loans Require Private Mortgage Insurance?
Not always.
Conventional loans commonly require PMI when the down payment is less than 20%, although requirements depend on the specific loan structure.
PMI protects the lender rather than the borrower, and its cost can vary based on several factors, including the borrower’s credit profile, loan amount, and down payment.
Requesting PMI cancellation
For many qualifying conventional mortgages on primary residences, you may request cancellation when the balance is scheduled to reach 80% of the home’s original value. You may be able to request it earlier if extra principal payments bring the balance to that level.
Conditions for cancellation
Conditions generally include:
- A written request
- A good payment history and being current on payments
- No subordinate liens, such as a second mortgage
- Evidence that the property’s value has not declined
Automatic termination
PMI generally ends automatically when the scheduled principal balance reaches 78% of the original value, provided payments are current.
Understanding the cost and potential duration of mortgage insurance is an important part of comparing mortgage options.
Conventional Loan vs. FHA Loan: Which Should You Consider?
Both conventional and FHA loans can offer financing options for homebuyers, including borrowers with smaller down payments.
| Conventional Loans | FHA Loans |
|---|---|
| Not government insured | Insured by the Federal Housing Administration |
| Some programs allow 3% down for eligible borrowers | Down payments as low as 3.5% for eligible borrowers |
| Credit and qualification requirements vary | May accommodate some lower credit scores |
| PMI typically applies with less than 20% down | FHA mortgage insurance generally applies |
| PMI may be canceled when eligible | Different mortgage insurance cancellation rules; insurance may remain for the loan term |
| Available for eligible primary, second, and investment properties | Generally intended for eligible primary residences |
The right choice depends on more than the interest rate.
Compare mortgage insurance, closing costs, and down payment requirements. Your credit and how long you expect to keep the loan also matter.
A conventional loan may be more suitable for one borrower, while an FHA loan may be more appropriate for another.
Use the same purchase price, down payment, and financial details to compare both options.
Can Self-Employed Borrowers Qualify for Conventional Loans?
Yes. Self-employed borrowers can qualify for conventional loans. Their income, assets, and credit must meet the loan program’s rules.
Lenders may ask for personal and business tax returns, income records, and other documents.
Because qualifying income isn’t always the same as gross business revenue, reviewing the documentation early can help identify potential issues before making an offer on a home.
Borrowers whose finances don’t fit standard conventional guidelines may also want to explore other financing programs.
Conventional Financing Considerations in Oregon and Washington
Homebuyers in Oregon and Washington should evaluate more than the purchase price when planning their financing.
Include property taxes, homeowners insurance, and any HOA dues in your budget. The property itself may also affect which loans you can use.
Other considerations may include:
- County-specific conforming loan limits
- Condominium project eligibility
- Financing requirements for second homes or investment properties
- Income documentation for self-employed borrowers
- Available down payment assistance programs
These details can influence which conventional loan options are available for a particular transaction.
Platinum Lending Solutions works with borrowers throughout Oregon and Washington, including Portland, the surrounding metro area, and Southwest Washington.
How Platinum Lending Solutions Helps You Evaluate Conventional Loans
Platinum Lending Solutions is an independent mortgage brokerage. We work with multiple lenders to compare loan options.
Our approach is to evaluate the financing details that matter to your situation, including:
- Available loan programs and qualification requirements
- Down payment and cash-to-close options
- Interest rates, points, and lender fees
- Estimated monthly housing expenses
- Mortgage insurance requirements
- Short-term and long-term financing considerations
An interest rate alone doesn’t tell you the full cost of a mortgage.
Two loans with different rates, fees, or mortgage insurance structures can produce very different financial outcomes.
Our goal is to help you understand those differences so you can make an informed financing decision.
Frequently Asked Questions About Conventional Loans
No. Some conventional loan programs allow eligible borrowers to purchase a primary residence with as little as 3% down. Other programs have different requirements, and PMI may apply with a down payment below 20%.
Credit requirements vary by loan program, lender, and underwriting method. Your overall credit profile, income, debt obligations, and available assets can also influence eligibility and pricing.
Yes. Conventional loans are available to eligible first-time and repeat homebuyers. Certain programs offer lower down payment options for qualifying borrowers.
Not necessarily. The comparison depends on interest rates, mortgage insurance, lender fees, down payment, and borrower qualifications. Reviewing the estimated overall cost of both options is more useful than comparing interest rates alone.
Yes. Eligible investment properties can be financed with conventional loans, although down payment, reserve, pricing, and qualification requirements differ from those for primary residences.
Yes, subject to eligibility. Conventional refinancing may allow homeowners to change loan terms, replace an existing mortgage, or access equity through an eligible cash-out refinance. Closing costs and longer-term financial effects should be considered.
Often, yes. Many conventional mortgages have PMI cancellation or termination provisions. The timing depends on the applicable rules, loan balance, payment history, property value, and servicing requirements.
Explore Conventional Loan Options With Platinum Lending Solutions
Whether you’re purchasing your first home, moving to another property, refinancing, or evaluating investment financing, understanding your mortgage options is an important first step.
Contact Platinum Lending Solutions to discuss conventional financing options available for your situation in Oregon or Washington.
Reviewed by Stacy Schlesinger, President, Platinum Lending Solutions | NMLS #252075.
Stacy brings more than 25 years of mortgage lending experience to helping Oregon and Washington borrowers evaluate home financing options.
Last updated: October 30, 2026.
All loan programs are subject to credit approval, eligibility requirements, and applicable lender guidelines. Program availability and terms are subject to change.
