Conventional loans

Who it's for

Buyers and refinancers with a credit score in the mid-600s or better, income that shows up on a W-2 or a couple of years of tax returns, and a down payment of at least 3 to 5 percent. That describes most of the people I work with, which is why this is the loan I close most often.

How it works

A conventional loan isn't insured by the government. Instead, it follows guidelines set by Fannie Mae and Freddie Mac, the two agencies that buy most mortgages in the country. If your file fits their box, the loan is priced well and moves quickly. If it doesn't, that's when we look at FHA, portfolio or Non-QM options.

The pricing is credit-driven. Your score and your down payment set the rate and the cost of mortgage insurance, and a small move in either can change your payment more than most buyers expect. That's a conversation we have before you shop, not after you're under contract.

What to know

Mortgage insurance is temporary. Put 20% down and there's no PMI at all. With less than 20% down you'll pay it, but unlike FHA it doesn't last forever: once your balance reaches 80% of the original value you can ask to have it removed (the lender may want an appraisal), and at 78% it cancels automatically. For a lot of buyers that makes a conventional loan cheaper than FHA over the life of the loan even when the FHA rate looks lower on day one.

3% down is real, with conditions. First-time buyers can put down 3% on a primary residence. Everyone else starts at 5%. Second homes and investment properties need 10% and 15% or more.

Gift funds are fine. A parent or relative can contribute all or part of your down payment on a primary residence. There's paperwork, and I'll walk you through it before the money moves so it doesn't delay closing.

A common question

"Should I put more down to avoid PMI?" Sometimes. It depends on what that cash would otherwise do for you, what the PMI actually costs at your credit tier, and how long you'll be in the house. I'll run it both ways so you can see the difference instead of guessing.

Around Washington, DC

The DC metro is a high-cost area, so the 2026 conforming limit here is $1,249,125 for a single-family home, against $832,750 in most of the country. That covers DC, Montgomery and Prince George's counties in Maryland, and Arlington, Fairfax, Loudoun and Alexandria in Virginia. Most buyers who assume they need a jumbo loan here don't.

Two local items that change the cash-to-close math:

• Maryland first-time buyers pay a reduced state transfer tax, and by statute the seller pays it. On a $600,000 purchase that's a few thousand dollars of closing costs you may not owe. Montgomery County's MPDU program and the Maryland Mortgage Program add down-payment help for buyers under the income limits.
• DC first-time buyers can apply for a reduced recordation tax rate of 0.725% (versus 1.1% or 1.45%), subject to price and income limits, and the DC Tax Abatement program can waive property tax for five years for qualifying households. Both require paperwork at closing, and both get missed when the lender doesn't know to ask.