What "conventional" means
A conventional loan is any mortgage that isn't insured by a government agency — it's sold to or guaranteed by Fannie Mae or Freddie Mac within their rules. That rulebook (limits, credit standards, down payment minimums) is why conventional lending rewards strong borrower profiles: the loan is priced on your actual risk, not a government backstop.
The 2026 limits
The Federal Housing Finance Agency set the 2026 baseline conforming loan limit for a one-unit property at $832,750 — up $26,250 from 2025's $806,500. Two- to four-unit properties carry higher limits. Minnesota has no designated high-cost counties, so the baseline applies statewide; above it, you're in jumbo territory.
Down payment options
- 3% down — HomeReady (Fannie Mae) and Home Possible (Freddie Mac), with income limits tied to area median income. Built for first-time and moderate-income buyers.
- 5% down — standard conventional for any buyer.
- 20% down — no mortgage insurance at all, and typically the best pricing tier.
Between 5% and 20% down, conventional mortgage insurance (PMI) applies. Unlike FHA's insurance, PMI is not permanent: it can be removed once your balance reaches 80% of the home's value, whether through paydown or appreciation. Over a seven-to-ten-year hold, that difference is often worth thousands.
Who conventional fits best
Buyers with 620+ credit (really 680+ for the pricing to shine), stable income, and a down payment of 5% or more. It's also the natural program for move-up buyers with substantial equity from a previous sale, and for investment properties once you're past the house-hacking stage. Compare it directly against FHA — at 640–660 credit with minimal down, the two programs often land within a rounding error of each other, and the tie-breaker is usually how long the mortgage insurance lasts.
Pairing with Minnesota assistance
Minnesota Housing's Start Up and Step Up programs pair affordable first mortgages — including conventional products — with down payment and closing cost assistance. If your income qualifies, the combination can materially shorten the savings timeline. Brian will check your eligibility against the county limits on the first call.