Name: Mortgage Mark
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If you are buying a home, chances are you will hear the term conventional financing or conventional loan thrown around. But what exactly does that mean? Is it better than other options? And how do you know if it is the right fit for you?

At Mortgage Mark, we want to make this easy to understand so you can feel confident and informed as you move forward with your home purchase. In this guide, we will break it down step-by-step, with plain language and practical insights.

Let’s dive in.

What Is Conventional Financing?

First, let’s start with the big picture.

When you apply for a residential mortgage, loans typically fall into one of two buckets:

Government loans such as FHA, VA, and USDA loans
Non-government loans which are called conventional financing

So when we say conventional financing, we are simply talking about any mortgage that is not a government-backed loan. It is not an official program name, but rather a category of loans.

Conventional loans are the most common type of mortgage. In fact, when you see interest rates or mortgage offers advertised on TV or online, those rates are usually referring to conventional loans.

Who Provides Conventional Loans?

While conventional loans are not issued by the government, they are typically backed by two key entities:

Fannie Mae (Federal National Mortgage Association)
Freddie Mac (Federal Home Loan Mortgage Corporation)

You will hear these two names a lot in the mortgage world. They are sometimes called the agencies because they set the guidelines for what a plain vanilla conventional loan looks like. These loans are bought and securitized by Fannie and Freddie on the secondary mortgage market.

Both Fannie Mae and Freddie Mac are technically government-sponsored enterprises, meaning they are not directly run by the government but do have certain government ties.

If a mortgage follows Fannie Mae or Freddie Mac’s guidelines, it is considered a conforming loan. We will explain that distinction more in a moment.

Conventional Loan Options And Down Payments

Conventional financing offers flexibility for homebuyers in terms of down payment and loan structure.

Some common options include:

Zero down payment: Possible with certain special programs combined with conventional financing
3% down: Available for first-time homebuyers and specific income-qualified borrowers
5% down: A very popular option for many buyers
10% to 20% down: Often used to avoid private mortgage insurance (PMI)
More than 20% down: Provides even better terms and lowers your total loan costs

At Mortgage Mark, we will walk you through all these options so you can choose what works best for your budget, savings, and financial goals.

The Difference Between Conventional And Non-QM Loans

In today’s mortgage market, you may also hear about non-QM loans (non-qualified mortgage loans).

Technically, some people consider non-QM loans part of the broad conventional category since they are non-government.

However, they are quite different from traditional Fannie Mae and Freddie Mac-backed loans.

Non-QM loans typically serve borrowers who need more flexibility around credit, income documentation, or property types that do not fit standard guidelines. This could include:

Self-employed borrowers using bank statement income
Real estate investors buying rental properties
Borrowers with unique credit situations

While these are valuable tools in the right situation, when we talk about conventional financing on this page, we are mainly referring to traditional conforming loans through Fannie Mae or Freddie Mac.

Conventional vs. Conforming Loans

Here is where many people, including mortgage pros, sometimes get confused.

They will use the terms conventional and conforming interchangeably. But they are not exactly the same.

Conventional loan refers to any non-government mortgage. It is the big bucket.
Conforming loan means a conventional loan that meets the specific guidelines set by Fannie Mae or Freddie Mac.

One key factor that determines whether a loan is conforming is the loan amount.

What Is The Conforming Loan Limit?

Each year, Fannie Mae and Freddie Mac set a maximum loan limit for conforming loans. This is called the conforming loan limit.

If your loan amount is below this limit, it is considered conforming.
If your loan amount is above this limit, it is considered a jumbo loan.

Jumbo loans are still conventional loans, but they are not conforming because they exceed the Fannie/Freddie limits.

For example, at the time of this writing, the conforming loan limit is over $800,000 for most areas.

In the past, this limit was much lower. Years ago, it was around $417,000 and remained there for many years.

In recent years, the limit has increased regularly to keep pace with rising home prices.

Jumbo loans have slightly different underwriting guidelines, but they are still a type of conventional financing.

In short: All conforming loans are conventional loans. Not all conventional loans are conforming loans.

Why Do Buyers Choose Conventional Financing?

There are many reasons why conventional loans are the most popular choice among homebuyers in Dallas, across Texas, and nationwide.
Here are some of the biggest advantages:

Flexible Down Payment Options

Conventional loans allow buyers to put down as little as 3%, or as much as they want. This flexibility makes it easier to structure a loan that matches your goals.

Competitive Interest Rates

Because conforming conventional loans are backed by Fannie Mae and Freddie Mac, they tend to offer very competitive interest rates, especially for borrowers with strong credit.

Broad Property Eligibility

Conventional loans can be used for:
- Primary residences
- Second homes
- Investment properties

Government loans such as FHA and VA often have more restrictions on property types. Conventional gives you more flexibility if you want to buy a vacation home or rental property.

No Upfront Mortgage Insurance

Unlike FHA loans, conventional loans do not require an upfront mortgage insurance premium. If you put down 20% or more, you can avoid PMI altogether.

PMI Can Be Removed

If you do pay PMI (with less than 20% down), it can be removed once you reach the required equity level. FHA mortgage insurance typically cannot be removed unless you refinance.
Loan Term Options
Conventional loans offer a wide range of term lengths, including:

30-year fixed
15-year fixed
10-year fixed
Adjustable-rate options

This flexibility allows you to customize your loan structure.

Are There Downsides To Conventional Loans?

While conventional financing is an excellent choice for many buyers, it is not always the right fit for every situation.

Here are a few potential considerations:

Credit Score Sensitivity

Conventional loans tend to reward borrowers with higher credit scores. If your credit profile is weaker, an FHA loan may offer better terms.

PMI For Low Down Payments

If you put less than 20% down, you will typically need to pay PMI, which adds to your monthly payment until you can remove it.

Stricter Guidelines For Certain Situations

If you are self-employed, have unique income, or are buying a non-standard property, a non-QM loan or government loan might be a better fit.

The great news is that when you work with the Mortgage Mark team, you don’t need to figure all of this out alone. We will assess your entire situation and present the best options.

Conventional Financing In The Dallas And Texas Market

If you are buying in Dallas, across Texas, or even nationwide (we work all over the US), conventional financing plays a huge role in local real estate markets.

In Texas, where home prices can vary widely depending on location, many buyers choose conventional loans because they offer flexibility and competitive terms.

We regularly help buyers throughout:

Dallas
Fort Worth
Austin
Houston
San Antonio
And many other Texas markets

Conventional financing is also a key option for buyers using local programs, including:

First-time homebuyer assistance
Down payment assistance programs
Community-specific grants and incentives

Many of these programs can pair with a conventional loan to create powerful opportunities for affordable homeownership.

How We Help You Navigate Conventional Financing

One thing we always tell our clients is this:

You do not need to know all the technical details about conventional vs. conforming vs. jumbo loans. That is our job.

At Mortgage Mark, we take the time to:

Review your full financial picture
Understand your short-term and long-term goals
Present clear loan options in plain language
Explain what those options mean for your monthly payment, closing costs, and cash flow

Guide you through the entire process from preapproval to closing

Our goal is simple: to make your mortgage experience as easy and empowering as possible. We will always recommend the loan that fits you best, not one that benefits us.

Key Takeaways About Conventional Financing

To sum it all up:

Conventional financing is any non-government mortgage.
Fannie Mae and Freddie Mac back conforming conventional loans.
The conforming loan limit determines whether a loan is conforming or jumbo.
Jumbo loans are still conventional, but not conforming.
Conventional loans offer flexible down payments, competitive rates, and broad property eligibility.
Not all buyers will qualify for the best conventional terms, but many will.

The right loan depends on your personal situation. We help you find it.

Ready To Explore Your Options?

If you are considering buying a home or refinancing in Dallas, Texas, or anywhere nationwide, we would love to help.

Our team will take the guesswork out of it and give you clear answers. Whether your best fit is conventional, jumbo, government, or even non-QM, we will present the best options and walk with you every step of the way.

Reach out to us today to get started. When you think mortgage, think Mark.

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