In the competitive DMV housing market, conventional loans stand out as a versatile and cost-effective option for primary residences, second homes, or investment properties. With baseline conforming limits at $806,500 for single-unit homes (scaling up to $1,209,750 in high-cost areas such as Arlington, Fairfax, and Montgomery County), these loans often deliver lower long-term costs, particularly for borrowers with solid credit who can avoid or eliminate PMI. They're perfect for strategies like house-hacking with low-down-payment multi-family units (2-4) or adding accessory dwelling units (ADUs) in urban hubs like DC.
Misconceptions, such as the requirement of a 20% down payment or flawless credit, can make many believe that FHA is their default program. This comprehensive guide cuts through the noise with straightforward insights, local DMV examples, and practical tools to leverage perks like automated approvals and expedited closings. As a nationally ranked loan officer with over 25 years at Vellum Mortgage, I've assisted more than 3,000 families with conventional loans—from second homes from the Blue Ridge Mountains to the Eastern Shore of MD, to investment properties in Baltimore and DC, to owner occupied homes for families all over the DMV, delivering efficient, tailored financing solutions.
With over 25 years specializing in mortgage lending in the DMV, I've helped over 5,000 families and buyers secure homes with conventional financing in competitive markets like the DC Metro and Baltimore. As a certified mortgage advisor, I provide personalized guidance to help you maximize your benefits and achieve your homeownership goals.
- John Downs, NMLS# 476406
Don't Navigate Conventional Loans Alone
Whether you're putting down as little as 3% as a first-time buyer or leveraging strong credit to avoid PMI in the Baltimore-DC region, we are here to help streamline the process with our competitive rates!
Schedule Your Free Homebuyer Strategy SessionConventional Loan Basics
Conventional loans are privately issued mortgages, often securitized and sold to entities like Fannie Mae or Freddie Mac, which back around 70% of all securitized U.S. mortgages. As the most prevalent loan type in the country, they provide flexible terms ranging from 15 to 30 years, with fixed or adjustable rates, and must adhere to conforming limits set by the Federal Housing Finance Agency (FHFA).
Key features include advanced automation, such as appraisal waivers and digital verifications for income and assets, allowing for streamlined processing and underwriting. Unlike government-backed loans, conventional options typically skip upfront fees, offering homebuyers low-cost mortgage opportunities.
Nearly all lenders offer conventional loans, but as a direct seller to Fannie Mae and Freddie Mac with full agency approvals, Vellum Mortgage bypasses unnecessary overlays, adhering strictly to guidelines for optimal flexibility and ease.
In the DMV, where conventional loans account for roughly 65% of financing, our expertise shines in analyzing all alternatives to place our buyers in the best possible financial position. For more, check our Complete Guide to Conventional Loans vs. Government-Backed.
Eligibility Requirements
Conventional loans, governed by the exhaustive guidelines of Fannie Mae and Freddie Mac—which span thousands of pages and incorporate hundreds of nuanced rules covering everything from borrower qualifications to property standards—prioritize financial stability and risk mitigation. Yet, these loans remain remarkably accessible, even for applicants with moderate credit profiles, thanks to flexible underwriting powered by advanced automated systems. Below, we've distilled the key high-level eligibility criteria to empower homebuyers in the DC, Maryland, and Virginia (DMV) region with clear, actionable insights.
Minimum 620, though 760+ yields the best rates and PMI costs.
Up to 50% back-end DTI, but automated underwriting systems (AUS) like Fannie Mae’s Desktop Underwriter (DU) or Freddie Mac’s Loan Product Advisor (LP) evaluate the full picture. Factors include credit depth, account balances, assets post-closing (reserves), Loan-to-Value ratio, Credit Score, and number of properties owned. I've seen approvals at 50% DTI with strong reserves, and denials at 35% due to thin credit—the algorithms draw from billions of loan data points to minimize risk.
3% for first-time buyers (no homeownership in the past three years), 5% for others; gifts can cover the entire amount (except for investment properties). Programs like HomeReady and Home Possible offer low-down payment options for non-first-time buyers with income caps—see our blog for details.
Suitable for primary, second, or investment properties to include single-family homes, condos, and Co-ops. For investments and multi-units, you can use projected rental income (minus 25% vacancy factor) from the appraisal to qualify. No cap on financed properties for owner-occupied purchases.
Involve a questionnaire on financials, HOA delinquencies, occupancy, reserves, structural integrity affidavits, and recent engineering reports—we're DMV condo pros, navigating these seamlessly.
Requires a two-year history (college counts), with specific rules for part-time, bonuses, overtime, or self-employment (typically two years' taxes, but exceptions for one year in some cases).
Loan Limits
In addition to the above criteria, conventional loan amounts are constrained by conforming limits that vary by location, property type, and local housing costs—ensuring alignment with market dynamics in areas like the DMV.
2025 Conventional Loan Limits for 1-4 Unit Properties
| Property Type | Baseline Limit (e.g., Baltimore MSA) | High-Cost Limit (DC MSA) |
|---|---|---|
| 1-Unit | $806,500 | $1,209,750 |
| 2-Unit | $1,032,650 | $1,548,975 |
| 3-Unit | $1,248,150 | $1,872,225 |
| 4-Unit | $1,551,250 | $2,326,875 |
These limits adjust annually based on home price trends; they've surged recently due to appreciation. Determining eligibility doesn't have to be invasive or time-consuming. At Vellum Mortgage, our skilled loan officers excel at asking targeted, clarifying questions to quickly assess your situation—without pulling credit or demanding documents upfront. In just a 15-minute call, you can understand exactly where you stand, receive detailed loan quotes, and get educated on your costs and payments.
Calculate Your Estimated Payment & Closing Costs
Use the sliders to instantly explore your options.
Not Sure If You Qualify for a Conventional Loan?
Let's assess your credit, down payment, income, and other factors side-by-side to confirm eligibility and find the best conventional fit for your goals—potentially saving you thousands in the DMV.
Schedule a Free ConsultationOr reach out directly: Text 202.899.2603 | Email DownsGroup@VellumMortgage.com
Benefits & Advantages
Conventional loans thrive in the DMV's varied landscape, from city condos to suburban single-family homes, accounting for the majority of mortgages closed in the region—roughly 65%—thanks to their unmatched flexibility, cost savings, and borrower-friendly features that cater to a wide range of financial profiles and property types. In a fast-paced market like DC, Maryland, and Virginia, where time is money, conventional loans leverage advanced automation to make the process feel as effortless as ordering takeout: from instant approvals via digital systems to streamlined closings in as little as 8 days, minimizing hassle while maximizing efficiency. Below, we break down the key benefits and advantages of conventional mortgages in the DMV, highlighting why they're the go-to option for primary residences, second homes, and investments.
Flexible Down Payment
Start at 3-5%; While PMI is required with less than 20% down, conventional PMI costs have come down substantially in the past few years with additional big-data enhancements.
Competitive Rates
Conventional rates set the market standard, influenced by loan-level pricing adjustments (LLPAs); first-time buyers benefit from waived LLPAs for better pricing.
Automation Benefits
Technology is saving borrowers time, money, and hassle. Appraisal waivers—available on 20-30% of loans when property data supports a reliable valuation without a physical inspection, along with digital income/asset checks, enable closings in as few as 8 days. Imagine securing your loan with just e-signatures: no need to chase pay stubs, bank statements, or old W-2s. Technology makes the process incredibly straightforward and hassle-free.
Instant Approvals
With automated underwriting, borrowers can receive full approval in minutes, as systems validate everything digitally and eliminate subjectivity from the loan officer's assessment. Often, within 30 minutes of receiving an initial online or phone application.
Pro-Tip: Most problems in the mortgage industry stem from loan officers giving bad advice, not knowing the guidelines, or poorly interpreting income—our expertise ensures accurate guidance from the start.
Investment/Second Homes
Fully supported—finance a Chesapeake Bay getaway or Baltimore rental without restrictions.
PMI Removal
Request cancellation at 20% equity via appraisal (after two years with 25% equity, or five years with 20%). Automatic termination at 78% LTV based on original value OR at 80% if you call your servicer.
Costs and Fees
Up to 3% for <10% down, 6% for 10%-25% down and 9% with LTV’s < 75%. This is particularly helpful for smaller sale prices, where closing costs are a larger percentage of the sale price. It can also help fund temporary or permanent rate buydowns, or even prepaying HOA dues for up to one year.
Your loan may have additional fees, called Loan Level Price Adjustments (LLPAs) to get the best rate given your down payment and credit score profile. In most cases, homebuyers will build those costs into the rate or pay the corresponding points at closing. Learn more by reading our blog on paying mortgage points.
For down payments under 20%, annual rates range 0.3-1.5% (billed monthly), customized by credit, DTI, borrowers, LTV, and more. PMI has been a staple since the 1950s, evolving from simple down-payment-based factors to today's complex model using over 20 data points for risk assessment.
Calculation: (Loan Amount x Annual Rate Factor) / 12 = Monthly PMI
Conventional PMI can be removed, depending on how you build 20% equity and how long your loan is seasoned. (See blog for details) PMI is also not a set rate; there are many PMI companies that offer a variety of rate structures based on their proprietary risk assessment models. At Vellum Mortgage, we utilize all PMI providers to ensure you always receive the best.
As an example, a $500,000 loan on a condo in Washington, DC, may have a PMI factor of .18% with one provider, .21% with three others, with the remaining being over .25%. While not a huge difference, it’s still $30 per month from high to low in this scenario.
Sample PMI Table for $500,000 Loan at 95% LTV (5% Down)
| Credit Score | #Borr | DTI | Annual Rate | Monthly PMI |
|---|---|---|---|---|
| 760+ | 1 | <36% | 0.22% | $92 |
| 760+ | 2 | <36% | 0.20% | $83 |
| 680-719 | 1 | 45% | 0.56% | $233 |
| 680-719 | 2 | 45% | 0.43% | $179 |
| 620-679 | 1 | 50% | 1.55% | $646 |
(Actuals vary by Zip Code, Credit Score, Property Type, LTV, Number of Borrowers, Front and Back Debt to Income Ratios.)
Explore Conventional Loan Costs in Your Area
Use our interactive calculators to estimate PMI, view exact closing costs by jurisdiction, monthly payments, and cash-to-close figures. Adjust sliders for down payment, credit score, and more to see what fits your budget in the DMV—compare with FHA and VA options to confirm if conventional is the smartest choice for you.
Or reach out directly: Text 202.899.2603
Email: DownsGroup@VellumMortgage.com
Special First Time Homebuyer Programs
If you're a first-time homebuyer in the DMV area, conventional loans offer access to specialized programs that reduce costs and improve affordability. These include low down payment options through Fannie Mae's HomeReady and Freddie Mac's Home Possible, which allow as little as 3% down, flexible income sources like boarder rent, and reduced private mortgage insurance (PMI).
Additionally, the standard first-time homebuyer program provides loan-level price adjustment (LLPA) waivers, eliminating risk-based fees to deliver better interest rates for eligible buyers (often ≤100% of area median income, or 120% in high-cost areas like DC , Montgomery County and Northern, Virginia).
First-time homebuyers can get better rates and terms through these tailored conventional loan features. See our blog on Mortgage Rates for First-Time Homebuyers in DC, MD, and VA for more specific details, including 2025 income limits and qualification examples.
Property Requirements
Conventional loans assess properties based on value, condition, and HOA reviews (for condos), ensuring they meet standards for habitability and marketability with more flexibility than government programs like FHA or VA. Governed by Fannie Mae and Freddie Mac guidelines, these requirements prioritize safety, soundness, and resale potential while allowing for modern efficiencies like appraisal waivers in the DC, Maryland, and Virginia (DMV) market—making it easier to finance diverse properties from urban condos to rural single-family homes without overly stringent inspections.
Conventional Loan Process
At Vellum Mortgage, our conventional loan application process harnesses cutting-edge automation for swift, seamless results, setting the standard in the DC, Maryland, and Virginia (DMV) market where speed and accuracy can make or break a home purchase. With over 25 years of expertise, our team delivers unmatched information, education, and stress-free guidance every step of the way—empowering you with clear explanations, personalized strategies, and proactive support to navigate complexities like appraisal waivers or income verifications without the usual headaches. Nobody handles this with more care; it shows in our 3,000+ satisfied families, lightning-fast approvals (often in minutes), and tailored solutions that turn daunting mortgage journeys into confident, exciting milestones.
Frequently Asked Questions
Explore answers to common questions about conventional loans in DC, Maryland, and Virginia, from down payments and credit scores to self-employment and PMI removal—helping you make informed decisions in the competitive DMV market.
No. 3% down suffices for first-time homebuyers, and 5% for repeat buyers. We've funded $825K DC condos with just 3% down and $1,250,000 homes with just 5% down!
A 620 credit score is required to qualify for a conventional loan however, the score alone does not guarantee an approval. Automated Underwriting Systems from Fannie Mae and Freddie Mac will ultimately determine your eligibility.
Yes. While agencies prefer two years of continued self-employment, they will consider less time as long as you have one full year of income filed on your most recent filed tax return.
Yes—conventional financing fully supports second homes and investments without restrictions, such as a Chesapeake Bay Airbnb getaway or a Baltimore single-family home rental.
PMI can be canceled once you reach 20% equity via an appraisal (after two years for 25% equity or five years for 20%). It automatically terminates at 78% LTV based on the original value, or at 80% if you contact your servicer—making it easier to eliminate than with other loan types.