Conventional Loan
Conventional Loan Pros and Cons for Virginia Homebuyers
Reviewed by the HomeMath editorial team Updated 2026-08-06
Key takeaways
- Down payment can be as low as 3% with qualified borrowers.
- No private mortgage insurance required if you put down 20% or more.
- Credit scores of 620 or higher are generally needed.
- Loan amounts are limited by annually adjusted conforming caps (roughly $700k in most Virginia counties).
- Conventional loans often have lower overall costs than government‑backed loans when you have good credit.
Conventional loans are privately‑issued mortgages that aren’t insured or guaranteed by the federal government. They are the most common financing option for Virginia homebuyers who have solid credit and can meet a moderate down‑payment requirement.
Key Pros
- Flexibility on property type – you can finance single‑family homes, condos, and townhouses that meet the lender’s standards.
- Potential to avoid private mortgage insurance (PMI) once you reach 20 % equity, which can lower monthly costs.
- Generally lower interest rates than FHA or VA loans for borrowers with strong credit scores.
- Higher loan limits than many government‑backed programs, subject to the annual conforming‑loan ceiling.
- Fewer upfront fees; there’s no government mortgage insurance premium.
Key Cons
- Stricter credit requirements – most lenders look for a score of 620 + and a stable payment history.
- Higher down‑payment expectations; while 3 % is possible, many lenders prefer 5‑10 % to secure better terms.
- PMI is required for any loan with less than 20 % down, adding to the monthly payment until equity is built.
- Less forgiving on debt‑to‑income ratios compared with FHA or VA loans.
- If you have limited cash reserves, the closing‑cost structure can be more demanding.
Virginia‑Specific Considerations
- Virginia commonly uses attorneys to conduct the closing, which can affect timing and fees compared with states that rely on title companies.
- The Virginia Housing Development Authority (VHDA) offers down‑payment assistance that can be paired with a conventional loan for first‑time buyers.
- Conforming‑loan limits are set each year; in most Virginia counties the limit is around the high $700,000 range, but it can be higher in designated high‑cost areas.
Understanding how a conventional loan works helps you weigh whether its advantages line up with your financial situation and home‑ownership goals.
This article provides general information and is not personalized financial or lending advice.
FAQ
Can I qualify for a conventional loan with a down payment less than 5% in Virginia?
Yes, some lenders offer conventional loans with as little as a 3% down payment for qualified borrowers. A lower down payment usually means a higher interest rate and the requirement to pay private mortgage insurance (PMI) until you reach 20% equity.
How does private mortgage insurance (PMI) work with a conventional loan?
PMI protects the lender if the borrower defaults and is required when the loan‑to‑value ratio is higher than 80% (i.e., less than 20% down). You pay a monthly premium that is based on the loan amount, down‑payment size, and credit score. Once you have at least 20% equity—through payments or home‑value appreciation—you can request cancellation of PMI.
What credit score do I need for a conventional loan in Virginia?
Most conventional lenders look for a minimum credit score of 620. Borrowers with scores in the 700‑plus range typically qualify for the best interest rates and may be eligible for lower down‑payment options.
Are there Virginia‑specific assistance programs that work with conventional loans?
The Virginia Housing Development Authority (VHDA) offers down‑payment assistance and grant programs that can be combined with conventional financing for first‑time homebuyers. Eligibility usually depends on income limits, purchase price caps, and completion of a homebuyer education course.
Do I need a real‑estate attorney for closing a conventional loan in Virginia?
Virginia commonly uses attorneys to handle the closing process, although some transactions may be completed by title companies. An attorney can review the mortgage documents, ensure the title is clear, and oversee the recording of the deed, which can help protect your interests.
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