20% planning comparison
$90,00020% of an illustrative $450,000 purchase.
Conventional Loans
Compare a conventional mortgage for a Colorado purchase or refinance, with a plan for down payment, mortgage insurance and the home itself.
A suburban detached home. Photograph by Curtis Adams. Resized from the original; illustrative photograph. Source · Pexels License.
Where conventional financing can fit
Conventional loans include conforming mortgages that follow Fannie Mae or Freddie Mac requirements. Eligible programs can serve primary homes, second homes and investment properties, with different down payment and reserve requirements. Some primary-home programs offer a low down payment; that does not make every borrower or property eligible.
You may not need 20% down
As little as 3% down for eligible primary-home programs
20
%
Eligible 3% option
$13,5003% of the same price, if the borrower and property qualify.
Plan beyond the down payment
+Closing costs, prepaid items, reserves where required, and monthly housing costs still matter.
Illustrative down-payment amounts only. The counter moves from 20% to a possible program minimum; it does not show a rate, discount or individual approval.
Some conventional primary-home programs allow 3% down, with program-specific first-time buyer or income conditions. Second homes and rentals follow different rules. We compare the upfront cash, mortgage insurance and monthly payment together.
Smart home financing starts with strategy
Buying or refinancing? We compare options across our network of 150+ wholesale lenders, explain the trade-offs, and build a plan around your goals. Start with a pre-approval video conversation so you know what to expect before moving forward.
Conventional qualification: four pieces of the picture
Credit
ReviewCredit history, score model and automated underwriting matter. A universal 620 minimum is no longer accurate for all Fannie Mae DU cases; lender overlays and other paths can differ.
Income & debts
DTIDocument eligible income and compare recurring debts with gross monthly income. Automated approvals can permit up to 50% DTI; manual rules and lender limits differ.
Cash & property
PlanShow the source of funds, reserves if needed and intended occupancy. Documentation depends on income type, not a universal requirement for two years of tax returns.
Our pre-approval video call connects these pieces to your budget before you start making offers. Fannie Mae credit-score guidance · DTI guidance.
Conventional terms that change the decision
| Term | What it means for your plan |
|---|---|
| Conforming limit | For 2026, the one-unit national baseline is $832,750; the high-cost ceiling is $1,249,125. Your actual county limit—not the national ceiling—determines the boundary. |
| PMI | Mortgage insurance often applies above 80% LTV. Eligible borrower-requested cancellation at 80% of original value is different from scheduled automatic termination at 78%; payment history and other conditions apply. |
| LTV | Loan amount divided by the accepted property value. Purchase calculations generally use the lower of price and appraised value. |
| Clear to close | Underwriting conditions have been satisfied for closing preparation. Funding, final checks and settlement requirements still matter. |
Conventional: compare the path that fits
What is a conventional loan?
A conventional mortgage is not insured or guaranteed by the federal government. A conforming loan meets Fannie Mae or Freddie Mac guidelines; other conventional structures may fall outside those limits. We compare down payment, credit, income documentation and occupancy together.
With a down payment of at least 20%, borrower-paid private mortgage insurance generally is not required. With a smaller down payment, compare the actual mortgage insurance quote alongside the rate and closing costs. Cash-out limits and credit requirements depend on the current program and property; our team will verify those rather than use a single rule for every borrower.
We make the process easier with technology, clear comparisons and a pre-approval video strategy conversation. Use our Conventional Mortgage Calculator as a starting point.
30-Year Fixed Rate Mortgage
The traditional 30-year fixed-rate mortgage has a fixed interest rate and scheduled principal-and-interest payment; taxes, insurance and other property costs can change.
A 30-year fixed-rate loan is a great option to keep your monthly mortgage payment lower or if you plan on staying in your home for years to come.
Whether 15 or 30 years or a customized term length (yes, we can do that), all the conventional options can allow extra principal payments without a prepayment penalty; our team verifies the terms of the specific loan.
So you can make additional payments to lower your interest and shave years off the mortgage term.
The reality is that most people will have moved or refinanced before they reach that 30-year mark and with equity growth use it to eliminate their mortgage. Looking for something more flexible? You can pick your mortgage term length. We offer mortgage terms from 8 – 30 Years.
15-Year Fixed Rate Mortgage
This conventional loan is fully amortized over a 15-year period and features constant monthly payments.
It offers all the advantages of the 30-year loan, plus a shorter payoff schedule; compare actual rates and the higher required payment.
The disadvantage is that, with a 15-year loan, you commit to a higher monthly payment that cannot be changed later.
We advise many borrowers to opt for a 30-year fixed-rate loan with no prepayment penalty and voluntarily make one to two extra principal payments each year (every 6 months, for example). This will reduce your principal and have a similar effect while not locking you into a higher monthly mortgage payment as with a 15-year loan.
There are other strategies as well, such as making bi-weekly mortgage payments.
Adjustable Rate Mortgage (ARM)
An Adjustable Rate Mortgage, unlike fixed-rate mortgages that have an interest rate that remains the same for the life of the loan, has a variable interest rate that changes periodically.
There are limitations to frequency and the amount it can increase, however, once the fixed period expires, usually for 3, 5, 7, or 10 years.
The initial interest rate of an ARM is typically lower than that of a fixed-rate mortgage, but not always enough to warrant the fluctuations.
Consequently, an ARM may be a good option to consider if:
- You plan to own your home for only a few years or expect to not keep the ARM loan past the fixed period
- You expect an increase in future earnings
- Prevailing interest rates for a fixed mortgage are too high at the moment.
Low Down Payment Options
Fannie Mae HomeReady™ and Freddie Mac Home Possible® are ideal conventional loans for low-to-moderate-income qualified homebuyers in high-cost or underserved communities. They are also great for first-time home buyers.
HomeReady™ and Home Possible® offer conventional alternatives to FHA loans with competitive pricing on fixed-and adjustable-rate loans with down payments as low as 3% which is lower than a 3.5 % on an FHA loan if you have good credit.
These are a great option for first-time homebuyers with good credit.
Some conventional loans may be paired with assistance when the borrower, property and participating lender meet the program rules. Explore our Colorado down payment assistance guide and compare the full first-mortgage and assistance terms before planning an offer.
Talk with our team today to review your best options.
Wholesale lenders in our network
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Our value is in the comparison and the plan: matching the financing to your goals, explaining the costs, and coordinating the details with you and your agent. Program availability and lender fit depend on the transaction.
Primary home
Discuss low-down-payment programs, mortgage insurance and a payment that leaves room for the rest of your life. Start your financing plan →
Second home or rental
Occupancy changes down payment, reserves and income-documentation requirements. Start your financing plan →
Purchase or refinance
Compare total costs, loan term and cash remaining after closing. Start your financing plan →
Fixed rate or adjustable rate?
A fixed-rate mortgage offers a stable principal-and-interest payment. An adjustable-rate mortgage starts with an initial rate period and can change later. Review the index, margin and adjustment caps, including the payment you could face if you keep the home longer than planned.
The right loan begins with your goals
Tell us how you plan to use the home, what monthly payment feels comfortable and how long you expect to keep the financing. We compare options across lenders, explain the costs and help you choose a strategy with a clear next step.
Our pre-approval video call gives you time to ask questions, understand the trade-offs and coordinate your financing before an offer or refinance decision.
Conforming limits and property choices
Conforming loan limits depend on county and year. A condominium also requires attention to the project—not just your personal approval. For an investment property, discuss rental income, reserves and occupancy honestly before making an offer.
Compare the full monthly cost
Plan for principal and interest, property taxes, homeowners insurance and any HOA or district charges. A fixed interest rate does not freeze taxes or insurance. Private mortgage insurance may apply when your down payment is below 20%; review its cost and the rules for removal.
What to review before choosing
- Your income documentation, credit profile, debts and funds for closing.
- The property type, occupancy, appraisal and any condominium project review.
- Loan Estimate comparisons using the same loan amount, lock period and closing date.
Compare conventional financing with FHA and down payment assistance where appropriate.
Explore Mortgage Calculators
Compare purchase, refinance and affordability scenarios, then let our team help turn the estimate into a financing plan.
Conventional seller credits: plan the offer before signing
| Situation | Credit planning rule |
|---|---|
| Primary / second home: LTV above 90% | 3% |
| Primary / second home: LTV 75.01%–90% | 6% |
| Primary / second home: LTV 75% or less | 9% |
| Investment property: all eligible LTV tiers | 2% |
For Fannie Mae financing, percentages use the lower of sales price and appraised value. At exactly 10% down, the usual purchase LTV is 90%, entering the 6% tier; exactly 25% down enters the 9% tier at 75% LTV. Other requirements and transaction details still apply.
Seller credits are negotiated, not guaranteed. Eligible credits may cover approved closing costs, prepaid items or points; they do not replace a required down payment or become unrestricted cash back. A percentage ceiling is not a promise that every dollar can be used. Repair arrangements and price changes need documented approval, not an informal workaround.
Questions worth asking
No. Some conventional programs permit a smaller down payment. Mortgage insurance, pricing, occupancy and eligibility should be compared together.
Eligible investment properties may qualify, but down payment, rental-income documentation and reserve requirements differ from a primary residence.
Your principal and interest payment is generally fixed, but taxes, insurance, mortgage insurance and association costs can change.
The program, occupancy and your full financial picture determine the requirements. Our team will review income, credit, debts and available funds together, then explain which conventional options fit. A score alone does not establish approval.
Cancellation depends on your loan, payment history, balance and applicable rules. We can review the original value, current balance and servicer requirements with you. Do not assume an increase in value automatically removes the charge.
More resources for your financing decision
Explore these related guides and resources from your original loan page.
What our clients say
Read more about Paul Cederholm and our team on Google Business Page and Experience.com.
Plan your next move
Bring your goals and a property address if you have one. Paul Cederholm, mortgage expert and real estate financing strategist, can help you compare the financing choices and plan your next step.
Ready to begin? Start your loan application. Prefer a direct conversation? Call 303-931-6798.
*Information, scenarios, and calculations are for educational and illustrative purposes only—not a loan offer, a commitment to lend, a rate quote or an approval. Programs, costs and qualification requirements depend on the borrower, property, selected lender and current guidelines. Examples are not guaranteed results. Our team can review the details for your situation.