Fannie Mae / Freddie Mac Conforming Programs
Conventional Mortgages — the workhorse loan.
3% down for first-time buyers. PMI cancels at 80% LTV. Best rates at 740+ FICO.
At a glance
What makes a conventional loan different
Minimum down (FTHB)
3%
First-time buyers via HomeReady / Home Possible programs.
Max LTV (FTHB)
97%
Fannie Mae HomeReady and Freddie Mac Home Possible cap at 97% LTV.
PMI cancellation
80% LTV
Request cancellation at 80% LTV; auto-terminates at 78% LTV (HPA).
Min credit (most investors)
620
Best pricing tiers start at 740+. Some investors accept 600 with overlays.
How it works
The conventional loan in plain English
"Conventional" means conforming to Fannie Mae and Freddie Mac underwriting — the two government-sponsored enterprises that buy the vast majority of U.S. mortgages on the secondary market. If the loan fits the Fannie/Freddie guidelines (loan amount, credit, income, DTI, property type), it prices competitively because the GSEs stand ready to purchase it. That liquidity is why conventional is the default "workhorse" loan in America.
Down payment options range from 3% (HomeReady and Home Possible for first-time buyers) to 5% standard, to 20% to skip PMI entirely. Above 80% LTV, private mortgage insurance is required — but unlike FHA MIP, conventional PMI is cancelable. Once you cross 80% LTV by either paying down principal or appreciating, you can request cancellation in writing (with a clean 12-month payment history). Federal law auto-cancels at 78% LTV based on the original amortization schedule regardless of value.
Credit score drives rate harder than any other factor. The pricing grid breaks into tiers at 620 (the floor), 660, 680, 700, 720, 740, 760, and 780+. Each tier up saves roughly 0.125%–0.375% in rate on the same loan. At 740+ FICO, you see the best pricing; below 680, rates climb noticeably. Alliance shops across a dozen conforming investors so tier treatment varies — we will sometimes find a 700 borrower a better rate at Investor B than a 720 borrower at Investor A.
The honest tradeoffs: (a) conventional requires clean documentation — W-2s, pay stubs, asset statements, tax returns if self-employed — with less forgiveness than FHA for thin credit or non-traditional income. (b) Gift funds are allowed on primary-residence purchases, but sourcing rules are strict (paper trail from donor to your account to closing). (c) Appraisal waivers are common on strong files and save $500–$800, but not guaranteed.
Conventional dominates when credit is 700+, income is documentable, and the property is standard. For non-QM scenarios (self-employed with aggressive deductions, investor focused on rent-based qualification, foreign national), Alliance has other products. See /mortgage for the full menu.
The numbers
Conventional parameters — 2026
Minimum down — first-time buyer (HomeReady / Home Possible)
3%
Minimum down — move-up purchase
5%
Minimum down — 2nd home
10%
Minimum down — investment property
15–25%
Typical PMI range (annual, % of loan)
0.30–1.15%
PMI auto-termination (HPA 1998)
78% LTV
PMI borrower-request cancellation
80% LTV
2026 conforming limit — 1-unit (most counties)
$806,500
2026 high-balance ceiling — 1-unit
$1,209,750
Conforming loan limits above reflect FHFA 2026 guidelines. Actual limits in high-cost counties (parts of CA, DC, MD, FL, NY) can reach $1,209,750. Alliance confirms your county’s limit during pre-approval.
Next step
Start the numbers or start the file
Get pre-qualified
Soft credit pull. Alliance returns your conforming loan limit, FICO-tier rate range, and PMI factor within one business day.
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Compare loans
Run conventional 5% down vs. 20% down side-by-side. See break-even month, lifetime PMI cost, and 5-year total payout.
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FAQ
What move-up buyers and first-timers ask us
How much is PMI on a conventional loan?
PMI on a conventional loan runs roughly 0.30%–1.15% of the loan balance annually, priced by FICO and LTV. A 720 FICO with 10% down lands around 0.45%; a 680 FICO with 5% down is closer to 0.90%. On a $400,000 loan, that ranges from $100/mo to $380/mo. Alliance quotes the exact PMI factor during pre-approval — it is not a guess once the file is keyed.
When does PMI actually go away?
Two triggers by law (Homeowners Protection Act 1998). Automatic termination at 78% LTV based on the ORIGINAL amortization schedule. Borrower-requested cancellation at 80% LTV — but this requires a written request, a clean 12-month payment history, and sometimes an appraisal to confirm current value. On a 30-year loan with 5% down, automatic termination lands around year 10. Pay down principal faster to cancel sooner.
Conventional 3% down or FHA 3.5% down — which is better?
Credit score decides. At 720+ FICO, conventional PMI is usually cheaper than FHA MIP AND cancels at 80% LTV — conventional wins clearly. At 620–680 FICO, FHA often prices better and its MIP sticks for life on <10%-down loans. The real cost to compare is the 5-year total outlay: principal + interest + PMI/MIP + UFMIP. Alliance runs both grids side-by-side on every first-time buyer file.
What is the 2026 conforming loan limit?
$806,500 for a 1-unit home in most counties (the general limit). High-cost counties, including parts of Florida, New York, DC/Maryland, and California, run up to $1,209,750. Anything above county limit is a jumbo loan with different underwriting. Alliance pulls the exact limit for your county during pre-approval.
What credit score do I need for a conventional loan?
620 is the Fannie/Freddie floor; 740+ unlocks the best pricing tier. Between those, rates and PMI step up in bands — a 680 typically pays 0.5%–1.0% more than a 740 borrower on the SAME loan amount over 30 years. Alliance pulls a tri-merge soft pull first, then the hard pull once you are ready to lock, so improving credit during the shopping phase actually helps.
Can I buy an investment property on a conventional loan?
Yes, with 15–25% down and higher rate adjustments than a primary. For 1-unit rentals, 15% down is the minimum (some investors require 20%). Rental income from the property can offset its PITI in qualifying, subject to Fannie/Freddie rental-income rules. If W-2 income is tight, a DSCR loan may qualify on the rent alone — see /mortgage for that path.
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