Conventional Loans
The most common mortgage in Michigan—and often the smartest path to your primary residence, second home, or investment property.
What is a Conventional Loan?
A Conventional loan is the most common type of mortgage and the workhorse of the housing market in Michigan. Unlike government-insured loans (like FHA or VA), conventional loans are backed by private lenders and follow guidelines set by Fannie Mae and Freddie Mac. They are an excellent choice for borrowers with stable credit and income, offering competitive rates and flexible terms.
For homebuyers in Grand Rapids and across Michigan, a conventional loan is often the go-to financing tool for purchasing a primary residence, a second home, or an investment property. It’s a straightforward path to homeownership built on a foundation of strong financial health.
CONVENTIONAL LOAN REQUIREMENTS
To qualify for a Conventional loan in Michigan, you generally need to meet these criteria:
- Credit Score: A minimum FICO score of 620 is typically required. Higher scores often lead to better interest rates.
- Down Payment: While 20% down allows you to avoid mortgage insurance, you can qualify with as little as 3% to 5% down, especially with programs like HomeReady and Home Possible.
- Debt-to-Income (DTI) Ratio: Lenders will look at your total monthly debts compared to your pre-tax income. A lower DTI ratio shows you can comfortably afford the new mortgage payment.
- Income and Employment: You’ll need to provide proof of a stable and consistent income, typically through W-2s, tax returns, and pay stubs.
- Cash Reserves: Depending on the scenario, you may need to show you have enough liquid assets to cover a few months of mortgage payments.
Get Started with a Conventional Loan
Benefits & Things to Consider with Conventional Loans
For borrowers with strong credit and steady income, a conventional loan offers a rare mix of competitive rates, flexible terms, and savings that add up over time.
How to Buy Your First Home in under 9 Minutes
New to residential loans? Watch this explainer video to learn more about the home buying process to purchase your first home in Michigan.
Conventional vs. FHA vs. USDA Loans
| Feature | Conventional Loan | FHA Loan | USDA Loan |
|---|---|---|---|
| Min. Down Payment | 3-5% | 3.5% | 0% |
| Credit Score | Stricter (620+) | Flexible (580+) | Moderate (640+) |
| Mortgage Insurance | Required under 20% down (Removable PMI) | Required for the life of the loan (MIP) | Required (Guarantee Fee) |
| Loan Limit (2026) | Up to $832,750 (conforming); jumbo above, no single regulatory cap | Up to $541,287 | $324,700 |
| Property Location | Anywhere | Anywhere | Eligible Rural Areas Only |
| Best For | Borrowers with good credit | Buyers needing credit flexibility | Buyers in rural Michigan |
What are Conventional Loan rates today?
Mortgage rates fluctuate daily based on market trends and economic factors. Conventional loan rates are highly competitive and depend on your credit score, down payment, and loan term. For the most current and accurate rates for your specific situation, it’s best to speak directly with one of our Loan Officers.
Rates shown are for illustrative purposes only, are subject to change, and are not a commitment to lend or a rate lock. Contact a Treadstone Loan Officer for a personalized quote.
Technical Loan Information
- Loan Limits: Follows the annual conforming loan limits set by the FHFA.
- Occupancy: Can be used for a primary residence, second home, or investment property.
- Property Types: Eligible for single-family homes, 1-4 unit multi-family homes, planned unit developments (PUDs), and warrantable condos.
- PMI (Private Mortgage Insurance): Required for down payments under 20%. It can be paid monthly, upfront, or a combination of both. It automatically terminates when your loan balance reaches 78% of the original home value.
Why Treadstone?
Aside from having the coolest mortgage staff on the planet…working with Treadstone on your mortgage in West Michigan gives you a distinct advantage in not only getting your offer accepted, but also in becoming a more successful and enlightened home owner.
Conventional Loan FAQ
You can get a conventional loan with as little as 3% down, especially if you qualify for programs like Fannie Mae’s HomeReady or Freddie Mac’s Home Possible, designed for first-time or lower-income homebuyers.
The most common way is to make a down payment of 20% or more. If you put down less, you can request to have PMI removed once you reach 20% equity, and it will automatically fall off when you reach 22% equity.
No. While a higher credit score will get you a better rate, the minimum FICO score to qualify is typically 620. This makes it accessible to a wide range of borrowers in Michigan.
Yes! Conventional loans are the most common way to finance investment properties. The down payment requirement is typically higher for non-owner-occupied homes, usually starting at 15-20%.
It depends on your situation. A conventional loan is often better for borrowers with strong credit because they can avoid the lifelong mortgage insurance of an FHA loan. However, an FHA loan is more flexible on credit scores and DTI ratios.
A “conforming” loan meets the size limits and guidelines set by Fannie Mae and Freddie Mac. A “non-conforming” loan, like a Jumbo loan, exceeds those limits and has different underwriting rules.
Because our entire team is local and in-house in Grand Rapids, our process is typically faster than national lenders. While every transaction is different, we pride ourselves on proactive communication and efficiency to get you to the closing table on time.
Absolutely. We will typically review your last two years of tax returns to verify a stable and consistent income. For business owners with high write-offs, we also offer specialty Bank Statement loans.
