Maryland & Virginia · NMLS #2656628

Conventional Loans. The Workhorse Mortgage That Rewards Strong Credit.

Conventional financing is the most common mortgage in America for a reason: down payments as low as 3% for first-time buyers, mortgage insurance that cancels automatically once you reach 22% equity, and pricing that improves as your credit does. Ken never assumes conventional is the answer. He shows you conventional and FHA side by side with real numbers, so you pick the loan that costs less over the years you will actually own the home.

📅 See If Conventional Fits Me Get Pre-Approved →

As little as 3% down PMI cancels at 22% equity Primary, second home & investment 24-hr pre-approval with docs

Ken Powell

Mortgage Loan Officer · Fairway Home Mortgage

NMLS #2656628 · Equal Housing Lender

Who Conventional Is Built For

Conventional Wins in Four Situations.

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Credit of 620 Plus, Especially 680 Plus

Conventional pricing is tiered by credit score. At 680 plus, and especially 740 plus, both your rate and your PMI cost drop meaningfully. If your credit is strong, conventional almost always beats FHA on total monthly cost, and Ken shows you the exact difference in dollars, not generalities.

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Buyers Planning to Stay a While

FHA mortgage insurance never cancels on loans with less than 10% down. Conventional PMI cancels automatically at 22% equity and can be removed at 20% by request. Over five to ten years of ownership, that difference alone can add up to tens of thousands of dollars.

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Condos, Second Homes & Investment Properties

Conventional financing covers properties FHA cannot: condos without FHA project approval, second homes, and 1 to 4 unit investment properties. If you are buying anything other than the primary residence you will live in, conventional is usually the starting point.

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First-Time Buyers With Modest Savings

Programs like HomeReady, Home Possible, and standard 97% financing put eligible first-time buyers into homes with just 3% down, and the down payment can be gifted. Pair that with Maryland down payment assistance and many buyers bring very little of their own cash to closing.

The Honest Comparison

Conventional vs. FHA. Run the Numbers Both Ways.

The right answer depends on your credit, your down payment, and how long you will keep the home. FHA is more forgiving on credit and debt-to-income, but its mortgage insurance is permanent on most loans. Conventional demands a little more up front and pays you back every month after. Ken's rule of thumb: at 620 to 679, it is a genuine head-to-head that deserves a side-by-side quote; at 680 plus, conventional usually wins; below 620, FHA is likely your open door today with a refinance to conventional planned for later. Either way, you see both options with real numbers before you commit.

✅ Choose Conventional When

Your credit is 620 plus, especially 680 plus
You can put 3 to 5% or more down
You plan to stay in the home long term and want PMI to cancel
The property is a condo without FHA approval, a second home, or an investment
You want to avoid FHA's upfront 1.75% mortgage insurance premium

✅ Choose FHA When

Your credit score is 580 to 619
Your debt-to-income ratio is too high for conventional approval
You had a recent bankruptcy or foreclosure and conventional waiting periods have not passed
Conventional PMI pricing is poor at your credit score
You are house hacking a 2 to 4 unit with minimal cash

Requirements

What It Takes to Qualify for a Conventional Loan in Maryland.

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Credit & History

620 minimum, with the best pricing at 740 plus. Chapter 7 bankruptcy: generally 4 years since discharge. Foreclosure: generally 7 years, less with extenuating circumstances. Clean recent payment history matters more than a perfect past.

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Income & Down Payment

Two years of stable employment history. W-2, self-employed, and 1099 income all work with documentation. Down payments start at 3% for eligible first-time buyers and 5% for most others; gift funds are allowed. DTI up to 50% with strong compensating factors.

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Property

Primary residences, second homes, and 1 to 4 unit investment properties. Single-family, townhomes, condos, and manufactured homes meeting agency requirements. Loans up to the conforming limit ($806,500 in most Maryland counties in 2026, higher in some DC-area counties); above that, Ken moves you to a jumbo loan.

Fairway has a loan program for almost any mortgage scenario. Contact Ken to determine which loan program best fits your needs.

Frequently Asked Questions

Conventional Loan Questions, Answered.

How much do I need to put down on a conventional loan?+

Eligible first-time buyers can put as little as 3% down through 97% financing or programs like HomeReady and Home Possible. Most other buyers start at 5%. Putting 20% down eliminates PMI entirely, but waiting years to save 20% often costs more than buying sooner with PMI that cancels. Ken runs both scenarios for you.

When does PMI go away on a conventional loan?+

PMI cancels automatically once your balance reaches 78% of the original value (22% equity); however, it does not always automatically fall off your payment before that point. You must request removal at 80% (20% equity), sometimes with a new appraisal after home-value appreciation. This is the biggest structural advantage conventional holds over FHA, whose mortgage insurance is permanent on most loans.

What credit score do I need for a conventional loan in Maryland?+

620 is the minimum. Pricing improves in tiers as your score rises, with the best rates and cheapest PMI at 740 plus. If you are between 620 and 679, it is worth quoting FHA alongside conventional, and Ken does that side by side automatically.

Can I use gift funds for a conventional down payment?+

Yes. Gift funds from family members are allowed for the down payment and closing costs on primary residences, documented with a gift letter. Conventional loans also pair with down payment assistance programs available to eligible Maryland buyers.

Can I buy an investment property with a conventional loan?+

Yes. Conventional financing covers 1 to 4 unit investment properties, typically with 15 to 25% down depending on the property type. Investors who prefer to qualify on rental cash flow instead of personal income can compare a DSCR loan; Ken shows both options and which one prices better for your file.