Conventional Loans, Explained by Someone Who Used to Approve Them

Toni Taylor Gozza spent years on the underwriting side of the desk with actual signing authority. Today her Palm Beach Gardens team builds conventional loans the way approvers want to read them.

In short

A conventional loan is a mortgage without government insurance that follows Fannie Mae and Freddie Mac guidelines. It fits borrowers with solid credit and steady income, allows down payments starting near 3%, and carries private mortgage insurance that can be removed once you build roughly 20% equity.

Reviewed by Toni Taylor Gozza, NMLS #274323 · Last updated July 24, 2026

How do I know whether a conventional loan is my best fit?

A conventional loan isn't backed by a government agency — it follows Fannie Mae and Freddie Mac guidelines instead — which makes it the natural home for borrowers with solid credit, steady income, and manageable debt. Two features do the heavy lifting: qualified buyers can put down as little as 3%, and the private mortgage insurance that comes with a small down payment can be removed once you reach roughly 20% equity, something FHA generally never allows without refinancing. It's also the main route for second homes and investment properties. Whether it beats FHA or another program for you comes down to your specific file — which is exactly the comparison our team runs before recommending anything.

Key takeaways

Conventional loans follow Fannie Mae and Freddie Mac guidelines rather than carrying government insurance — your credit and income carry the file.
Qualified buyers can start near 3% down; 20% has never been the entry price.
PMI on a conventional loan is removable around 20% equity and terminates automatically near 22% — a structural edge over FHA's usually-permanent insurance.
Loan amounts above your county's annual conforming limit shift into jumbo territory; we confirm the current line for your scenario.
Conventional is the primary route for second homes and investment properties.
Toni's underwriting signing authority and wholesale background mean your file is built the way approvers actually read it.

The conventional loan is the workhorse of American home financing, and when your credit and income are solid it's often the smartest tool in the box. What Interconnect Mortgage adds is perspective most brokerages simply don't have: Toni has held underwriting signing authority and run an entire wholesale mortgage operation, so our team assembles your file the way the person approving it actually reads it. From 3%-down first purchases to move-up, second-home, and investment financing across Palm Beach County, here's how conventional lending really works.

What “Conventional” Actually Means

A conventional loan is any mortgage that isn't insured or guaranteed by the government. Instead of FHA, VA, or USDA backing, these loans conform to standards published by Fannie Mae and Freddie Mac — the two entities behind most of the U.S. mortgage market. No government guarantee means the lender leans harder on you: your credit history, your income stability, and your down payment carry the file.

That sounds intimidating. In practice, for borrowers with reasonable credit, it's an advantage — the loan is judged on your actual strength, and our team knows precisely how to present it.

Retire the 20%-Down Myth

You do not need 20% down for a conventional loan. Qualified buyers — first-timers especially — can start near 3%, and 5%, 10%, and 15% structures are everyday occurrences. Each tier changes your monthly payment and your mortgage insurance differently, and the “right” amount depends on what the rest of your financial life needs that cash for. We model the tiers so you're choosing deliberately, not defaulting to folklore.

The trade-off to understand: below 20% down, private mortgage insurance (PMI) rides along. Which brings us to the best part.

PMI That Actually Leaves

On a conventional loan, PMI is a phase, not a life sentence. Build to roughly 20% equity — through payments, appreciation, or both, and Palm Beach County appreciation has done many owners real favors — and you can request removal. At about 22% equity it terminates automatically. Compare that with FHA, where mortgage insurance typically stays for the life of the loan on small-down-payment files, and the long-run math often tilts conventional for strong-credit borrowers. We chart both timelines for you before you commit.

Conventional vs. FHA, Honestly

QuestionConventionalFHA
Who backs it?Fannie/Freddie guidelines, no government insuranceFederal Housing Administration
Minimum downAbout 3%About 3.5%
Credit postureBuilt for solid-to-strong filesBuilt for rebuilding and thinner files
Mortgage insuranceRemovable around 20% equityUsually stays for the life of the loan
Second homes / rentalsYesNo — primary residences only
Property standardsMore flexibleStricter appraisal condition rules

Neither wins universally. The answer lives in your credit, your cash, and how long you'll hold the home — a comparison we run for every client rather than assuming.

Conforming Limits, and the Line Into Jumbo

Conventional loans at or under the Federal Housing Finance Agency's limit for your county are “conforming.” The limit resets annually and varies by location, and loan amounts above it move into jumbo territory with different rules. Palm Beach County's price points put some buyers closer to that line than they expect — we'll confirm the current number for your exact scenario so nothing surprises you mid-contract.

Why an Underwriter's Eye Changes the Outcome

Here's Toni's honest edge, earned over a career that started in 1990: she's been the person with signing authority deciding whether a file was approvable, and she's run a wholesale mortgage company that answered to secondary-market investors. She knows what they need to see — which documents, framed which way, anticipating which questions. Our team packages every conventional file with that playbook, which is why loans that stall elsewhere tend to move here.

Let's Price Your Scenario

What will your loan actually cost? That depends on your credit, your down payment, the property, and the day's market — not on a generic number from a website. Reach out and we'll price your real scenario, alongside every alternative worth considering.

This page is general education — not an offer or commitment to lend and not a quote of terms. Guidelines, mortgage insurance rules, and conforming limits change and vary by county and borrower. Contact the Interconnect Mortgage team for figures specific to your situation.

Quick facts

Loan type
Not government-insured (conforming)
Typical minimum credit score
Generally around 620+
Typical minimum down payment
As low as 3% for eligible buyers
Mortgage insurance
PMI required under 20% down; removable at 20% equity
Occupancy
Primary, second home, or investment
Loan limits
Conforming limits change annually — ask for current figures

Is this loan right for you?

Who it's for

  • Borrowers with credit generally in the 620-and-up range
  • Buyers who want mortgage insurance that ends once equity reaches about 20%
  • Move-up buyers, second-home buyers, and investors across Palm Beach County
  • Buyers putting down anywhere from 3% to well over 20%

Who it may not fit

  • Borrowers with recent significant credit events or lower scores — FHA's flexibility may serve them better
  • Borrowers carrying very high debt-to-income ratios who need more forgiving underwriting

Pros and cons

Pros

  • Entry point near 3% down for eligible buyers
  • PMI is removable at roughly 20% equity rather than lasting the life of the loan
  • Strong files are judged on their strength — and ours are packaged by a team with underwriting experience
  • Covers primary homes, second homes, and investment properties

Trade-offs to weigh

  • Expects stronger credit than FHA
  • PMI applies until the equity threshold whenever you put less than 20% down

Frequently asked questions

Is 3% down on a conventional loan real, or a bait-and-switch?

It's real. Qualified buyers — particularly first-time buyers — can genuinely close with about 3% down on conventional programs. The honest fine print is simply PMI: below 20% down you'll carry it until you reach roughly 20% equity. We'll show you exactly how different down payments change your monthly cost so there's no surprise.

When does PMI come off a conventional loan?

You can request removal once you reach about 20% equity through payments, appreciation, or both, and it ends automatically near 22%. In a market like Palm Beach County's, appreciation often gets owners there sooner than their amortization schedule alone would. It's a key reason strong-credit buyers frequently choose conventional over FHA.

What credit does a conventional loan expect?

Generally solid-to-strong credit, commonly starting around the 620 range, with stronger files unlocking better loan structures. There's no single magic number, and how your specific profile prices out is something we calculate, not guess at — send us your details and we'll price your actual scenario.

What if my loan amount is over the conforming limit for Palm Beach County?

Then you're shopping for a jumbo loan, which follows its own guidelines — typically stronger credit, more reserves, and a larger down payment. Sometimes a slightly larger down payment keeps a loan under the conforming line on purpose. We'll run both structures and show you which serves you better.

Can I buy a second home or rental with a conventional loan?

Yes — and for most buyers it's the main option, since FHA, VA, and USDA are limited to primary residences. Expect larger down payment and reserve requirements than an owner-occupied purchase. Our team structures second-home and investor conventional files regularly across South Florida.

How is applying with Interconnect different from applying at a big bank?

Two things: options and packaging. As brokers we can place your loan with many lenders instead of one shelf of products, and because Toni has held underwriting signing authority, we assemble your file to answer the underwriter's questions before they're asked. That combination is why files that drag elsewhere tend to close here.

Related loan programs

Last updated July 24, 2026 · Reviewed by Toni Taylor Gozza, NMLS #274323. This page is educational and not a commitment to lend; program details change — ask for current figures.

Ready to talk about your conventional loans?

Tell me a little about your situation and I'll walk you through the real numbers — your down payment, your monthly payment, and your smartest next step. No cost, no obligation.

Toni Taylor Gozza, NMLS #274323 · Interconnect Mortgage Inc., NMLS #1720882. Equal Housing Opportunity. Rates and figures referenced are examples only and subject to change until locked.
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