Conventional loans

The conforming loan limit

The Federal Housing Finance Agency sets the maximum loan size Fannie Mae and Freddie Mac can buy. For 2026 the baseline limit for a one-unit property is $832,750, an increase of $26,250 from 2025. In high-cost areas the limit is higher, up to a ceiling of $1,249,125, which is 150 percent of the baseline. Alaska, Hawaii, Guam and the U.S. Virgin Islands have special limits. A loan above the local limit is a jumbo loan, which follows each lender's own rules and usually asks for more down payment and reserves.

Low down payment options

Fannie Mae's HomeReady allows down payments as low as 3 percent, with no minimum personal contribution, and accepts gifts, grants and certain second loans as sources. Freddie Mac's Home Possible also allows 3 percent down and caps qualifying income at 80 percent of the area median income, with no geographic limits on loan amounts. Both programs offer reduced mortgage insurance coverage on high loan-to-value loans. Lenders also offer standard conventional loans at 97 percent loan-to-value under each company's rules for eligible buyers.

Private mortgage insurance

With less than 20 percent down on a conventional loan, the lender will usually require private mortgage insurance. The CFPB explains that PMI can be paid monthly, upfront at closing, or both, and that it protects the lender, not you. Unlike FHA's insurance on many low-down-payment loans, PMI on a typical loan can be cancelled on request once the balance reaches 80 percent of the original value and must end automatically at 78 percent if you are current, under the federal rules the CFPB summarizes. The mortgage insurance long read on this site covers those rules in detail.

How pricing works

Conventional pricing reflects credit score, loan-to-value, property type and occupancy, so two buyers with the same price can see different rates and insurance premiums. That is why a buyer with strong credit and a larger down payment can find conventional cheaper than FHA, while a buyer with a lower score can find the reverse. Comparing Loan Estimates for both is the only reliable test.

Questions to ask a conventional lender

• Will you run my file through an automated system, and what minimum score do you require?
• What will private mortgage insurance cost at my score and down payment, and when could it be cancelled?
• Am I eligible for HomeReady or Home Possible at this property address?
• Is my loan amount within the conforming limit for this county?
• How do you treat gifts, assistance and retirement plan loans in my down payment?

The answers usually show quickly whether a conventional loan beats FHA for you. The new guides on requirements and on the two 3 percent programs explain what is behind each question.

Above the limit: jumbo loans

Fannie Mae and Freddie Mac only buy loans up to the conforming limit FHFA sets each year. For 2026 the one-unit baseline is $832,750, rising to $1,249,125 in high-cost areas. A loan even slightly above your county's limit is a jumbo mortgage. The CFPB notes that mortgages may exceed the limits and that jumbo loans may cost more. Because the agencies do not buy them, each lender sets its own credit, down payment and reserve rules, so offers can differ widely. Consumer protections still apply: lenders must assess your ability to repay, and jumbo loans must meet special requirements to count as qualified mortgages. The jumbo guide in this file explains these rules and includes a calculator showing how far a loan sits above the limit and how much down payment would keep it conforming. Sometimes a slightly larger down payment is cheaper than a jumbo loan, and sometimes keeping cash in reserve matters more.

How to use this file

Start with the 3 percent down guide, which compares HomeReady, Home Possible and the standard option with a worked example. Then use the guides on PMI, the conforming limit, jumbo loans and removing mortgage insurance. If your income is near a program limit, use each company's official lookup tool before deciding.