Conventional
Fannie Mae and Freddie Mac loans, including high balance. Where most buyers with solid credit start.
How it works
A conventional loan is any mortgage that is not insured or guaranteed by a government agency. In practice that means it follows the guidelines set by Fannie Mae or Freddie Mac, the two entities that buy the overwhelming majority of American mortgages on the secondary market.
The reason conventional financing is the starting point for most buyers is that it is the cheapest capital available to a borrower with solid credit and documented income. Mortgage insurance, when it is required at all, can be removed once you have enough equity, which is not true of every program.
Los Angeles County carries a high balance conforming limit well above the national figure, which means a meaningful share of Santa Clarita Valley purchases that would be jumbo elsewhere still qualify as conventional here. That distinction is worth checking before assuming a purchase price puts you into jumbo territory, because the pricing and the guidelines are different.
Who it fits
This program is usually the right tool when:
- Borrowers with established credit history and documented, stable income
- W2 employees whose tax returns reflect what they actually earn
- Buyers who want the option to remove mortgage insurance later
- Purchases inside the Los Angeles County high balance conforming limit
What to watch for
The parts nobody leads with.
- Guidelines are set by the agencies, so there is less lender to lender variation here than in any other program. If a conventional loan does not work at one lender, it usually will not work at another.
- Automated underwriting drives the answer. A file that gets an unfavorable finding often needs a structural change, not a different lender.
- Condo projects have to meet agency warrantability standards. A project that fails review pushes the file toward a non-QM lender.
Common questions
What is the difference between conforming and high balance?
Both are conventional loans following agency guidelines. High balance applies in designated high cost counties, including Los Angeles County, and allows a larger loan amount than the standard national conforming limit. Pricing on high balance is typically slightly higher than standard conforming.
Can mortgage insurance be removed from a conventional loan?
Yes. Borrower paid mortgage insurance on a conventional loan can be cancelled once the loan reaches the equity threshold set by federal law and the servicer, based on either the original value or a new appraisal depending on the servicer policy. This is a meaningful advantage over FHA financing, where the insurance generally stays for the life of the loan.