Conventional Loans
Conventional Loans in Colorado
Conventional loans are the workhorse mortgage for Colorado buyers with strong credit and a standard down payment. Here's how to know if they're the right fit — and how I shop them to get you the best pricing.
The short answer
Conventional loans are the standard mortgage product in the United States and the most common loan I write for Colorado buyers with strong credit. They allow down payments as low as 3% for first-time buyers, mortgage insurance that comes off automatically once you reach 20% equity, and they're the only path for second homes and investment properties in Colorado.
When conventional makes sense
- You have strong credit (720+). Conventional pricing rewards good credit more aggressively than FHA does.
- You're putting 20% or more down. No PMI, no MIP, simpler structure.
- You want PMI to fall off automatically. Conventional PMI ends at 78% loan-to-value by law. FHA mortgage insurance often stays for the life of the loan.
- You're buying a second home or investment property. Conventional is the standard path — FHA doesn't allow these.
- You want a higher loan amount. Conventional loan limits in most Colorado counties are higher than FHA limits.
Down payment options in Colorado
Conventional loans are more flexible than most Colorado buyers realize:
- → 3% down for first-time homebuyers (Fannie Mae HomeReady, Freddie Mac Home Possible)
- → 5% down for most repeat buyers
- → 10% down for second homes
- → 15%–25% down for investment properties
- → 20% down = no PMI
Down payment assistance programs can also pair with conventional loans in some cases. Read about the 30+ DPA programs I work with →
FHA vs. conventional: how I decide for Colorado clients
Most Colorado buyers should run the numbers both ways. Quick rules of thumb:
- → Credit 700+ and 5%+ down → conventional usually wins
- → Credit 620–700 → run both, often a coin flip
- → Strong credit but only 3.5% down → FHA may beat conventional on the base rate
- → Buying a second home or investment → conventional only
- → Self-employed with complex income → depends on the lender, often easier to qualify conventional with a strong file
Read the full FHA vs. Conventional breakdown →
Why work with me on a conventional loan
Conventional pricing varies more between lenders than most buyers realize. The same loan amount and credit profile can show 0.25%–0.50% rate differences across lenders on the same day. As an independent broker, I shop 160+ lenders and find you the best conventional pricing available the day you apply.
I also handle the trickier conventional scenarios: self-employed borrowers, complex commission income, recent job changes, gift funds, large reserves, and high-DTI files. The right lender for one situation may be the wrong lender for another — that's where the broker advantage shows up.
Frequently asked questions
When is a conventional loan a better fit than FHA in Colorado?
Conventional loans usually win for buyers with strong credit (720+), 20% or more down, or anyone who wants the mortgage insurance to come off automatically once they reach 20% equity. They're also the standard for Colorado buyers purchasing investment properties or second homes.
What's the minimum down payment on a conventional loan in Colorado?
As low as 3% down for first-time homebuyers, or 5% down for most other situations. With 20% down, you avoid private mortgage insurance (PMI) entirely.
Does PMI come off a conventional loan automatically?
Yes — once your loan balance hits 78% of the original purchase price, PMI is automatically removed by federal law. You can also request removal at 80% equity. That's a meaningful long-term advantage over FHA, where mortgage insurance often stays for the life of the loan.
What credit score do I need for a conventional loan in Colorado?
Most conventional loans require a minimum 620 credit score. For the best rates, lenders typically look for 720 or higher. Some programs allow scores in the 600–620 range with strong compensating factors (low DTI, larger down payment, significant cash reserves).
Can I use a conventional loan for a second home or investment property in Colorado?
Yes — conventional loans are the standard for non-primary residences in Colorado. Second homes typically require 10% down. Investment properties require 15%–25% down depending on the property type and your overall financial picture.
How do conventional loans handle student loan debt for Colorado buyers?
Conventional loans typically use your actual monthly student loan payment in DTI calculations. For income-driven repayment plans, the actual payment counts (rather than a phantom 1% of the balance like older rules used). This often helps Colorado buyers qualify for more.
Related reading
Want to see if conventional is your best fit?
I'll run conventional, FHA, and DPA scenarios side by side so you can pick with real numbers.
Or fill out the contact form and I'll get back to you the same day.