What is a conventional loan?
A conventional loan is a mortgage that isn't backed by the government. Most follow guidelines set by Fannie Mae and Freddie Mac, which buy mortgages from lenders. A loan that meets their guidelines and stays under their loan limit is called a conforming loan.
Because these loans are easy for lenders to sell, they often come with competitive rates, especially for borrowers with strong credit and a solid down payment.
What are the 2026 conforming loan limits?
For 2026, the baseline limit for a single-family home is $832,750, which applies to most Oregon counties. In a few designated high-cost areas around the country the limit can reach $1,249,125. If you need to borrow more, you'd typically use a jumbo loan.
What do you need to qualify?
| Requirement | Typical guideline |
|---|---|
| Credit score | 620 minimum; better pricing as your score rises |
| Down payment | 3% to 5% minimum, depending on the buyer and property |
| Debt-to-income ratio | Often up to the mid-40s, sometimes higher with a strong file |
| Income | Steady, documented income, usually with a two-year history |
Guidelines vary by lender and your overall file.
How does PMI work on a conventional loan?
With less than 20% down you'll pay private mortgage insurance (PMI). It's priced on your whole file: credit score, down payment, debt-to-income ratio, and even the number of borrowers. With strong credit it's often lower than people expect. I recently had clients buy a home for about $540,000 with 10% down, and their PMI came to about $52 a month.
PMI is also priced in brackets. Putting 5% down and 7% down often cost the same, so if you put more down, it usually pays to reach the next bracket. More on choosing a down payment.
Benefits of a conventional loan
- Lower cost with strong credit. Rates and PMI reward a stronger file.
- PMI goes away. Unlike most FHA loans, conventional PMI ends once you build enough equity.
- Flexible property use. Primary homes, second homes, and rental properties.
- Term options. Fixed or adjustable rates, with terms commonly from 10 to 30 years.
Is a conventional loan right for you?
If you have a solid credit score and some savings, a conventional loan is often the most affordable way to buy. If your credit is still recovering, an FHA loan might have the lower payment. I run both side by side and let you decide.
New to buying in Oregon? See my step-by-step guide.
Related guides
Frequently asked questions
What credit score do you need for a conventional loan?
Usually at least 620. Pricing and mortgage insurance keep improving in steps as your score rises, up to about 780.
Can I get a conventional loan with less than 20% down?
Yes. Some buyers can put as little as 3% down, and 5% or 10% down is common. With less than 20% down you’ll pay private mortgage insurance (PMI) until you build enough equity.
What is the 2026 conforming loan limit in Oregon?
For a single-family home, the baseline limit is $832,750 in most Oregon counties, including Multnomah, Washington, and Clackamas. Above that, you’d typically need a jumbo loan.
When does PMI go away on a conventional loan?
You can ask to remove it once your loan balance reaches 80% of the home’s original value, and it ends automatically at 78%. Rising home values can also let you remove it early with a new appraisal or a refinance.
Is conventional better than FHA?
It depends on your credit and debts. With strong credit, conventional usually wins. With a lower score, FHA can have the lower payment. Here’s how to compare them.
Educational only, not a commitment to lend. Program guidelines, limits, and pricing change, and every loan is subject to underwriting approval. Example numbers are illustrations, not quotes.
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