⚡ Quick Answer
A conventional loan is a mortgage not backed by the government (vs. FHA, VA, USDA loans). It's the most common mortgage type in the US — about 70% of all mortgages are conventional.
What is a conventional loan?
A conventional loan is a mortgage not backed by the government (vs. FHA, VA, USDA loans). It's the most common mortgage type in the US — about 70% of all mortgages are conventional.
Conventional loan requirements (2026)
| Feature | Requirement |
|---|---|
| Credit score | 620 minimum, 680+ recommended for H1B |
| Down payment | 3% (first-time homebuyer programs) to 20% |
| PMI | Required if down payment under 20% (removable) |
| Loan limit (conforming) | $766,550 (most areas), $1,149,825 (high-cost) |
| DTI ratio | Under 43%, ideally under 36% |
PMI: The key conventional advantage over FHA
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With conventional loans, PMI (Private Mortgage Insurance) is:
- Removable at 20% equity (by law, lenders must cancel at 22% equity)
- Lower rate than FHA MIP in most cases
- Not required if you put 20%+ down upfront
For FHA: MIP is permanent (if under 10% down). For conventional: PMI disappears.
Conforming vs non-conforming
| Type | Loan limit | Notes |
|---|---|---|
| Conforming | Up to $766,550 | Backed by Fannie/Freddie. Easiest approval. |
| High-balance conforming | $766,550 – $1,149,825 | High-cost areas (CA, NY, WA) |
| Jumbo | Above $1,149,825 | Private market. Stricter H1B requirements. |
H1B conventional loan requirements (beyond standard)
- I-797 with 12+ months remaining (preferred by most lenders)
- Employment letter from sponsor confirming ongoing H1B sponsorship
- 2 years US income history (most lenders require; international history accepted with documentation)
Down payment options
| Down payment | PMI? | Monthly PMI on $500K | When PMI drops |
|---|---|---|---|
| 3% | Yes | $130-$200/mo | At 20% equity |
| 5% | Yes | $110-$175/mo | At 20% equity |
| 10% | Yes | $80-$130/mo | At 20% equity |
| 20% | No PMI | $0 | Never needed |
Conventional vs FHA for H1B — when conventional wins
- Credit score 680+: Conventional is cheaper long-term (PMI ends vs FHA MIP forever)
- Down payment 10%+: PMI reaches 20% equity faster
- Loan over FHA limits: Conventional is the only conforming option
- Planning to stay 5+ years: The PMI removal makes conventional cheaper over time
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