You have 20% down, a 740 credit score, and stable W-2 income. The conventional loan gives you the best rate with no PMI.
Conventional loans are not government-backed. They conform to the guidelines set by Fannie Mae or Freddie Mac (the GSEs, or government-sponsored enterprises). The down payment can be as low as 3% (for first-time buyers), 5% (standard), or 20% (to avoid PMI). The credit score threshold is typically 620+.
A mortgage that conforms to Fannie Mae or Freddie Mac guidelines. The most common loan type in the US.
Conventional loans are the most common. The recon cutoff tool’s per-conventional-handling tracks the conventional-specific documentation. The recon cutoff tool’s per-PMI-flag includes the PMI in the loan terms (when LTV > 80%).
For the broader bank statement workflow, see the bank statement converter guide. For the bookkeeper workflow, see the bookkeeper workflow. For the mortgage application, see the mortgage application guide.
What Is Conventional Loan?
A mortgage that conforms to Fannie Mae or Freddie Mac guidelines. The most common loan type in the US.
What most guides miss about this workflow is that the quality depends on the mechanism, not on the tool. Two tools that look different on the surface often run the same 4-step process underneath: read, find, parse, verify. The difference is in how well each step handles edge cases (merged cells, missing balances, non-standard date formats, scanned vs digital input). Choosing between tools based on UI alone misses the actual quality lever.
Conventional loans are the most common. The recon cutoff tool’s per-conventional-handling tracks the conventional-specific documentation. The recon cutoff tool’s per-PMI-flag includes the PMI in the loan terms (when LTV > 80%).
Why Conventional Loan Matters
Conventional loans are the workhorse of the US mortgage market. For borrowers with 20% down and 740+ credit, conventional is often the cheapest option. The recon cutoff tool’s per-conventional-doc-list handles the conventional-specific documentation.
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Putting less than 20% down without considering PMI. PMI adds 0.5-1% to the annual payment.
The recon cutoff tool’s per-conventional-loan-handling covers this case. The recon cutoff tool’s per-related-tracking handles the document trail.
Common Mistakes with Conventional Loan
Putting less than 20% down without considering PMI. PMI adds 0.5-1% to the annual payment.
Exceeding the conventional loan limit. Conforming loan limits vary by county ($766,550 in 2026 for most areas).
Confusing conforming with non-conforming (jumbo). Jumbo loans are conventional but exceed the conforming limit.
A common failure mode is the borrower assuming conventional is the only option for high-credit borrowers. For veterans, VA is often better. For low-down buyers, FHA is often better. The fix: compare conventional, FHA, and VA before deciding.
The Memorable Line
Conventional is the standard loan. Best for stable borrowers with 20% down.
Related Terms
FHA loan | VA loan | DTI | Mortgage application guide | Bank statement glossary For the related what is an authorization hold on a credit card? page, see the linked article. For the related what is the statement balance on a credit card? page, see the linked article.
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