Loan types
Conventional loan
A mortgage not insured by a government agency (FHA, VA, or USDA), following Fannie Mae and Freddie Mac guidelines — usually needing a 620+ score and 3–20% down.
What does conventional loan mean?
A conventional loan is the most common mortgage — made by private lenders without a government guarantee. It follows the conforming limits and underwriting rules set by Fannie Mae and Freddie Mac, so it typically asks for stronger credit and lower debt-to-income than an FHA or VA loan. You can put as little as 3% down through first-time programs, but below 20% you pay private mortgage insurance — which, unlike FHA's, cancels once you reach 20% equity. For Michigan buyers with 700+ credit, that cancellable PMI usually makes conventional the cheaper long-run choice.
Common questions
What credit score do I need for a conventional loan?
Generally 620, with the best pricing at 740+. Below 620, an FHA loan is usually the more realistic path in Michigan.
Do conventional loans require 20% down?
No — first-time programs allow as little as 3% down. But below 20% you pay PMI, which cancels automatically at 20% equity, unlike FHA insurance.
Conventional or FHA in Michigan?
At 700+ credit, conventional usually wins on total cost thanks to cancellable PMI. Below 620 or with little savings, FHA is typically easier to qualify for and priced competitively.
Related terms