Why do most buyers end up on a conventional loan?
Because the mortgage insurance stops. Put less than 20 percent down and you pay it, but it comes off once you have built enough equity, which is the opposite of FHA at a low down payment.
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It falls away automatically once the balance reaches a set share of the original value, and you can request removal earlier once you are there. That single difference is what makes conventional the better long-term loan for most buyers who can qualify for it, and it is worth thousands over an Orange County loan term.
Rising prices help you here too. If your home appreciates, you can ask for the insurance to be removed based on a current value rather than waiting for the balance to fall, which in a market that has moved can bring the date forward by years. Very few borrowers ask.
What is the minimum down payment?
Three percent on a conforming conventional loan through the first-time buyer programmes, which is lower than FHA's 3.5 percent. Most buyers assume the opposite.
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| Down payment | What it means |
|---|---|
| 3 percent | Available through first-time buyer programmes, with income limits |
| 5 to 15 percent | Standard conventional; insurance until you reach the threshold |
| 20 percent | No mortgage insurance at all |
The 3 percent programmes carry income limits and usually a homebuyer education requirement, which is why they are not the default and why a lender may not mention them unprompted. Ask specifically.
Between 3 and 20 percent, more down means a lower rate and less insurance, so there is a real trade against keeping cash in reserve. Reserves matter more than buyers expect, so do not empty an account to reach a number.
What is the conforming limit in Orange County?
$1,249,125 on a one-unit home for 2026, which is the high-cost ceiling, against a national baseline of $832,750.
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Being at the ceiling matters more than buyers realise. Conforming loans follow a shared rulebook, which is why terms are consistent between lenders and the process is predictable. Above the limit each lender writes its own rules, so the same borrower can get materially different answers.
A loan sitting just over the line is therefore worth a conversation about whether a slightly larger down payment brings it back under. On a purchase near the threshold that is frequently worth more over the term than anything negotiated on the price.
What credit score and debt ratio do I need?
There is no single number. An automated approval can accept a file that a hand-underwritten one would not, and lenders layer their own requirements on top.
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As a practical guide: a score in the 700s gets you good pricing, the 600s is workable with a larger down payment, and below that FHA usually becomes the better route. Debt-to-income is judged alongside your reserves and your down payment rather than against a fixed cap.
What moves your score reliably in the months before buying is unglamorous: pay balances down, open nothing new, close nothing old. It is worth more than shopping for a rate, and it is the one part of your file you still control.
Does being in a high-cost county change anything?
Yes. A loan above the national baseline but at or under the county limit is treated as high-balance, which usually carries a small pricing adjustment over an ordinary conforming loan.
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It is still conforming, still follows the shared rulebook and still has insurance that ends. The difference is a modest premium on the rate, and it applies to a very large share of Orange County purchases because so many sit in that band.
Worth knowing when comparing a quote here against advice written for the rest of the country. The rate you are offered is not worse because something is wrong with your file; it reflects where the loan sits.
What will I have to provide?
Income, assets and debts documented by third parties, and an appraisal. Credit documents have a shelf life, so a long search means refreshing them.
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Expect pay records, tax returns, and statements for every account you are drawing on. Where an automated system can verify income or assets directly through your payroll provider or bank, that is faster and worth agreeing to.
The appraisal is the part outside your control. In some circumstances a full appraisal can be waived on a strong file with a substantial down payment, which saves time and money, and it is worth asking your lender whether your file might qualify.
Can I use one for a second home or a rental?
Yes, and both are priced worse than a home you live in. The occupancy you state is a matter of fact rather than preference.
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A second home needs to be genuinely occupied by you part of the year and is priced between a primary residence and an investment property. A rental carries the largest adjustment, a bigger down payment and a reserve requirement.
Stating an occupancy you do not intend is one of the few things in a mortgage application with consequences well beyond the loan, and lenders check. If your plans are genuinely uncertain, say so to your lender rather than choosing the cheaper box.
When does my loan become a jumbo?
Above $1,249,125 on a one-unit Orange County home. At or below it, conforming; above it, the lender's own rules.
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The change is not just the rate. Above the line the underwriting is manual, the documentation is heavier, reserves are required, and the timeline is longer, which affects the contingency periods you should agree to in an offer.
Our jumbo loans page covers what changes and, more usefully, how to stay under the line with a larger down payment or a second lien behind the first. On a purchase near the threshold that comparison is worth asking your lender to price.
FAQs
Common questions about Conventional Loans
Why choose conventional over FHA?
Because the mortgage insurance ends. It falls away once the balance reaches a set share of the original value, and you can request removal earlier once you are there. FHA at a low down payment never stops charging it, which over an Orange County loan term is worth thousands.
Can I get the insurance removed sooner?
Often yes, and hardly anybody asks. If your home has appreciated you can request removal based on a current value rather than waiting for the balance to fall, which in a market that has moved can bring the date forward by years. It costs an appraisal and a phone call.
What is the minimum down payment?
Three percent through the first-time buyer programmes, which is lower than FHA's 3.5 percent and surprises most people. Those programmes carry income limits and usually a homebuyer education requirement, which is why a lender may not raise them unless you ask specifically.
What is the conforming limit here?
$1,249,125 on a one-unit home for 2026, the high-cost ceiling, against a national baseline of $832,750. Conforming loans follow a shared rulebook so terms are consistent between lenders, which is exactly what stops being true above the line.
What credit score do I need?
There is no single number, because an automated approval can accept a file a hand-underwritten one would not, and lenders add their own requirements. As a guide: the 700s gets good pricing, the 600s is workable with more down, and below that FHA is usually the better route.
Is my rate worse because Orange County is high-cost?
A loan above the national baseline but under the county limit is treated as high-balance and usually carries a small pricing adjustment. It is still conforming with insurance that ends. The rate reflects where the loan sits rather than anything being wrong with your file.
Can the appraisal be waived?
Sometimes, on a strong file with a substantial down payment, which saves both time and money. It is worth asking your lender directly whether your file might qualify, because it is not something that gets offered unprompted.
Can I buy a rental with a conventional loan?
Yes, with a larger down payment, a reserve requirement and a worse rate than a home you live in. A second home sits between the two. The occupancy you state is a matter of fact rather than preference and lenders check, so if your plans are uncertain, say so rather than choosing the cheaper box.
How much should I put down?
More lowers your rate and your insurance, but reserves matter more than buyers expect, so do not empty an account to reach a round number. A buyer with the exact down payment and nothing behind it is the one who gets declined late in the process.
What happens above the conforming limit?
The lender writes its own rules, so underwriting becomes manual, documentation heavier, reserves required and the timeline longer, which affects the contingency periods you should agree to. On a purchase near the line, ask your lender to price staying under it with more down or a second lien.