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Most Common Purchase • Refinance

Conventional Loans
in Michigan.

The most flexible, most widely-used mortgage program available. If you have decent credit and a modest down payment, conventional is usually where the conversation starts -- and often where it ends.

See If You Qualify Ask Kirby or Angie
Quick Answer

A conventional loan is a mortgage not backed by the government. It offers down payments as low as 3%, works on most property types, and has lower long-term costs than FHA for buyers with solid credit. Most Michigan homebuyers with a 620+ credit score and stable income will qualify -- and for borrowers with 740+ scores, it is usually the best deal available.

620+
Min Credit Score
3%
Min Down Payment
$806,500
2025 Loan Limit
PMI
Drops at 20% Equity
Most
Property Types

What Is a Conventional Loan?

A conventional loan is any mortgage that is not insured or guaranteed by a federal agency. No FHA, no VA, no USDA -- just a loan between you, the lender, and the secondary market (Fannie Mae or Freddie Mac) that buys it after closing.

Because there is no government guarantee, lenders apply stricter standards on credit, income, and property condition than FHA or VA loans. But the trade-off is flexibility -- conventional loans work on a much wider range of property types, allow smaller down payments than most people assume, and carry lower long-term costs for buyers with strong credit profiles.

In Northern Michigan, conventional is the program we use most often. It covers everything from primary residences to second homes to investment properties, including certain manufactured homes and condominiums that government programs won't touch.

Who Conventional Works Best For

  • Buyers with a 620+ credit score -- ideally 680 or higher
  • Anyone putting 20% or more down who wants to avoid mortgage insurance entirely
  • Buyers with 5-19% down who want PMI that cancels automatically at 20% equity
  • First-time buyers qualifying for 3% down programs like HomeReady or Home Possible
  • Second home and vacation property buyers (FHA and USDA don't cover these)
  • Investment property buyers (FHA requires owner occupancy)
  • Anyone buying a property that doesn't meet FHA condition requirements

Conventional vs. FHA -- The Honest Answer

The most common question we get is whether to go conventional or FHA. The answer depends almost entirely on your credit score and how much you're putting down.

FHA loans are backed by the government and have looser credit requirements -- useful if your score is below 640 or you've had credit challenges. But FHA charges mortgage insurance for the life of the loan in most cases, which adds a permanent monthly cost.

Conventional mortgage insurance (PMI) is temporary. Once you hit 20% equity, it cancels automatically -- or you can request cancellation when you reach that threshold. For buyers with solid credit, the long-term math almost always favors conventional.

Quick Requirements

Min Credit Score620
Min Down Payment3% (5% standard)
Max Loan (2025)$806,500
Mortgage InsuranceRequired if <20% down
PMI Cancels At20% equity
Property TypesMost residential
Second HomesYes
Investment PropertyYes (3-25% down)

Not Sure Which Program Fits?

Tell us your situation and we'll tell you exactly which program saves you the most money. No cost, no commitment.

Free Consultation Quick Pre-Qual

Conventional vs. FHA vs. USDA -- Side by Side

How conventional stacks up against the other common purchase programs.

Factor Conventional FHA
Min Credit Score620580
Min Down Payment3% (first-time)3.5%
Mortgage InsuranceCancels at 20%Life of loan (usually)
Better for Credit 740+Yes -- lower PMINo advantage
Second HomesYesNo
Investment PropertyYesNo
Property ConditionMore flexibleStrict requirements
Upfront MIPNone1.75% of loan

How the Process Works

From first conversation to closing day -- what to expect.

1

Start with a Conversation

Call, text, or fill out the quick pre-qual form. We look at your credit, income, and down payment to confirm conventional is the right fit and tell you exactly what you qualify for.

2

Get Pre-Approved

We pull credit, verify income and assets, and issue a pre-approval letter. This is what your real estate agent presents with every offer -- and it tells sellers you are a serious, qualified buyer.

3

Find Your Property

Work with your agent to find the right home. Once you have an accepted offer, we move into formal underwriting.

4

Underwriting and Appraisal

The property gets appraised, the underwriter reviews your full file, and we work through any conditions that come up. We keep you informed at every step -- no disappearing acts.

5

Clear to Close

Once underwriting is complete and all conditions are satisfied, you get a clear to close. We review final numbers together, you sign at the closing table, and you get your keys.

Frequently Asked Questions

Most conventional loans require a minimum 620 credit score, though better rates and lower mortgage insurance costs come with scores of 740 and above. The higher your score, the better your pricing. If your score is below 620, FHA or a credit improvement plan is usually the starting conversation.
First-time homebuyers can put as little as 3% down through programs like Fannie Mae HomeReady or Freddie Mac Home Possible. Repeat buyers typically need 5% minimum. With 20% or more down, you avoid private mortgage insurance entirely -- which can save hundreds per month depending on your loan size.
Conventional is usually the better choice when you have a 680+ credit score, at least 5% to put down, and are buying a standard residential property. FHA mortgage insurance typically stays for the life of the loan -- conventional PMI cancels automatically at 20% equity. For most buyers with decent credit, conventional costs less over time.
The 2025 conforming loan limit for most Michigan counties is $806,500 for a single-family home. Loans above this amount are considered jumbo loans and fall outside conventional guidelines -- though Kirby and Angie offer jumbo financing for higher-value purchases as well.
Conventional loans can work on certain manufactured homes (typically double-wide on owned land with a permanent foundation), second homes, and investment properties -- with different down payment and qualification requirements than a primary residence. Not all manufactured homes qualify under conventional guidelines, so the specific property details matter. Call us and we'll tell you quickly whether your target property works.

Ready to See If Conventional Is Your Move?

Takes five minutes to find out. No SSN required to start. Kirby and Angie will tell you exactly where you stand and what you qualify for.

Start Your Pre-Qual Schedule a Free Consultation

Kirby and Angie Mortgage Loan Team | Union Home Mortgage | NMLS #2229229 | Angie Anderson NMLS #1999286 | Kirby Slocum NMLS #680817 | Licensed in Michigan, Ohio, and Indiana | Equal Housing Lender. All loans subject to credit approval, underwriting review, and eligibility requirements. Rates, terms, and program availability subject to change without notice. Information provided is for educational purposes and does not constitute a loan commitment or guarantee of financing.