Conventional Loans California — 5% Down
Conventional Loans
The Gold Standard for Homebuyers with Strong Credit
Conventional loans offer the most flexibility — lower rates for high-credit borrowers, no upfront mortgage insurance, and the ability to cancel PMI once you reach 20% equity.
- As low as 5% down payment
- No upfront mortgage insurance
- PMI cancels at 20% equity
- Loan amounts up to $1,149,825 (conforming)
- Fixed and adjustable rate options
- Best rates for 720+ credit scores
A conventional loan is a mortgage not backed by a government agency, conforming to Fannie Mae or Freddie Mac guidelines. It offers the best rates for borrowers with credit scores of 680+ and is the most widely used loan type in California for both purchases and refinances.
What Is a Conventional Loan?
A conventional loan is any mortgage that is not insured or guaranteed by a federal government agency. Most conventional loans conform to Fannie Mae and Freddie Mac guidelines — these are called "conforming" loans. Jumbo loans exceed conforming limits but are also conventional. Because there is no government insurance, lenders rely more heavily on your credit score, income, and down payment.
Conventional Loan Requirements
To qualify for a conventional loan, you typically need a minimum credit score of 620 (though 680+ gets the best rates), a debt-to-income ratio below 45%, a down payment of at least 3% for primary residences, and documented income through W-2s, tax returns, or pay stubs. Investment properties and second homes require higher down payments (10–25%).
2026 Conforming Loan Limits in California
The 2026 conforming loan limit for most U.S. counties is $806,500 for a single-family home. In high-cost California counties — including Los Angeles, Orange, San Diego, and Riverside — the limit rises to $1,149,825. Loans above these limits are considered jumbo loans and have slightly different requirements.
Private Mortgage Insurance (PMI)
If you put less than 20% down on a conventional loan, you will pay PMI — typically 0.5%–1.5% of the loan amount annually. Unlike FHA MIP, conventional PMI automatically cancels when your loan-to-value ratio reaches 80% (or you can request cancellation). This makes conventional loans more cost-effective long-term for buyers who start with less than 20% down.
Fixed vs. Adjustable Rate Conventional Loans
Conventional loans are available as 30-year fixed, 20-year fixed, 15-year fixed, or adjustable-rate mortgages (ARMs). A 30-year fixed offers the lowest monthly payment and payment certainty. A 15-year fixed builds equity faster and has a lower rate but a higher payment. ARMs (5/1, 7/1, 10/1) offer a lower initial rate for buyers who plan to sell or refinance within the fixed period.
Conventional vs. FHA: Which Should You Choose?
Choose conventional if your credit score is 680+ and you can put at least 5% down — you will likely get a lower total cost than FHA once you factor in MIP. Choose FHA if your credit is below 680, your DTI is high, or you need gift funds for the down payment. Our loan officers will run both scenarios side-by-side so you can see the true cost difference.
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Rates shown are for illustrative purposes and subject to change. Contact us for a personalized rate quote. NMLS #2221613.
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