The full explanation
When the amount is within the conforming loan limit the loan is called "conforming"; above it, it is a "jumbo" loan. It usually asks for a higher credit score than an FHA loan and, if your down payment is less than 20% of the price, you are normally required to buy private mortgage insurance (PMI) until you build enough equity in the home.
An example
Daniel has good credit and saved a large down payment. It pays to compare a conventional loan, which has no FHA premium, with an FHA loan, and look at the total cost of each on the Loan Estimate.
With real numbers
Computed with official data for the whole U.S. In your county the numbers may differ.
- Down payment for no PMI (20%)
- $66,540
- Balance where it ends on its own (78%)
- $259,506
A conventional loan carries PMI when you put less than 20% down. On a $332,700 home, the typical U.S. value, that is $66,540. If you put less, the law requires PMI to end when your balance is scheduled to reach $259,506 (78% of the original value), as long as you are current.
Computed with: American Community Survey (ACS) 5-year estimates (2020–2024) · Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance (October 17, 2026) · Homeowners Protection Act of 1998, 12 U.S.C. §4902 (October 9, 2026)
You will see it in…
- The Loan Estimate, in the “Loan type” box (Conventional)
- Bank offers and loan comparisons
- Down payment assistance program requirements
