About Conventional Home Loans

A conventional home loan is a mortgage that follows Fannie Mae and Freddie Mac rules instead of being insured by FHA, VA, or USDA. In King and Snohomish counties for 2026, conventional loans go up to $1,063,750 for a one-unit home, allow as little as 3% down for qualified buyers, and let you remove mortgage insurance once you reach 20% equity.

Conventional financing is what most Seattle-area buyers end up using, from first condos in Capitol Hill to move-up homes in Kirkland. Here is how it works, what it takes to qualify, and how to pick your down payment.

What Is a Conventional Home Loan?

A conventional loan is made by a private lender and sold to, or underwritten to the standards of, Fannie Mae or Freddie Mac. Loans within the annual size limit are called conforming loans. Loans above it are jumbo loans, which follow each lender's own rules.

Because there is no government insurance, conventional loans use private mortgage insurance (PMI) when you put down less than 20%. Unlike FHA mortgage insurance, PMI goes away once you build enough equity.

2026 Conventional Loan Limits in King and Snohomish Counties

Loans between the national baseline of $832,750 and $1,063,750 are high-balance conforming loans. They are still conventional, not jumbo. Above the limit, see my guide to jumbo home loans in Washington.

Conventional Loan Down Payment Options

Conventional loans let you choose how much to put down. More down usually means a lower payment and less PMI, while less down keeps more cash in your accounts:

• 3% down is available through HomeReady and Home Possible for buyers earning up to 80% of area median income ($120,960 in King and Snohomish counties for 2026), and through standard 97% loans when at least one buyer is a first-time buyer.
• 5% down is the most common low down payment option and has no first-time buyer requirement. See also conventional loans with 5% down in Seattle.
• 10% down lowers PMI noticeably and strengthens an offer.
• 15% down brings PMI down further and gets you close to removing it.
• 20% down means no PMI and the widest range of loan options.

For a side-by-side view, see my conventional down payment comparison and Seattle down payment guide.

Conventional Loan Requirements

• Credit score. Lenders typically look for 620 or higher, and pricing improves at higher scores, with meaningful steps at 680, 700, 720, and 740.
• Debt-to-income ratio. Automated underwriting can approve up to 50% for strong files.
• Income and assets. Two years of employment history is typical, plus statements showing your down payment and closing funds. RSU and bonus income can count with a reliable history.
• Gift funds. On a one-unit primary home, the entire down payment can come from a family gift. Two- to four-unit homes with less than 20% down need a 5% contribution from your own funds.
• Property. Single-family homes, townhomes, and condos in eligible projects. Second homes typically need at least 10% down and investment properties at least 15%.

Private Mortgage Insurance (PMI)

PMI applies when you put down less than 20%. Its cost depends mostly on your credit score and down payment, and it is paid monthly with your mortgage. You can ask your servicer to cancel it once your balance reaches 80% of the home's original value, and it ends automatically at 78%. If your home gains value, many lenders will also remove PMI based on a new appraisal.

First-time buyers also get a break on upfront costs. Fannie Mae and Freddie Mac waive certain upfront loan fees for first-time buyers earning up to $181,440 in King and Snohomish counties for 2026 (120% of area median income), subject to your full loan profile and credit approval.

Conventional vs FHA, VA, and USDA

Buyers with a credit score around 680 or higher usually come out ahead with conventional over FHA because PMI can be removed, while FHA can be easier to qualify for with lower scores or higher debt. I compare both on actual Loan Estimates before you choose.

Fixed-Rate vs Adjustable-Rate Conventional Loans

A fixed-rate loan keeps the same principal and interest payment for the whole term, usually 30 or 15 years. An adjustable-rate mortgage (ARM) starts with a fixed period, often 5, 7, or 10 years, then adjusts. ARMs can make sense if you expect to move or refinance before the fixed period ends, which is common among Seattle tech buyers expecting relocation or a move-up. My guide to the 7/6 SOFR ARM in Seattle explains how the most common 7-year ARM works, including its rate caps and who it fits.

Refinancing a Conventional Loan

Conventional loans can be refinanced to lower the rate, change the term, remove PMI, or take cash out up to 80% of the home's value on a one-unit primary residence. My Seattle refinance guide walks through the break-even math.

The Conventional Loan Process

1. Get fully pre-approved with your pay stubs, W-2s, statements, and any RSU history.
2. Choose your down payment path by weighing payment, PMI, and the cash you want to keep.
3. Make your offer. Conventional offers are widely trusted by Seattle sellers, and my team closes in 9 business days.
4. Appraisal and underwriting. Some purchases qualify for an appraisal waiver.
5. Close with escrow and get your keys. The full timeline is in my mortgage loan process guide.

Conventional Home Loans: FAQs

Let's connect. Call or text (206) 601-3426, email keith@mortgagereel.com, start your application, or book a time to talk. I will lay out every down payment option side by side, pressure-free.