Conventional Home Loans in North Carolina and South Carolina

Qualified first-time homebuyers may have conventional options requiring as little as 3% down. A 5% down payment is common for many other primary-residence purchases, although requirements can vary based on occupancy, property type, income limits and automated underwriting findings.

Conventional financing may also be available for second homes and investment properties, but these transactions generally require larger down payments than primary-residence purchases.

Some conventional loans can be combined with eligible down-payment-assistance programs. However, assistance programs may have income limits, purchase-price limits, location requirements or additional repayment terms.

Putting 20% down generally allows a buyer to avoid borrower-paid private mortgage insurance. Buyers putting less than 20% down may still have several mortgage-insurance structures available, and PMI may later be eligible for cancellation when applicable requirements are met.

The best down payment is not automatically the largest one. I compare the payment, cash required, mortgage insurance and remaining reserves before recommending a structure.

Conventional loans can sometimes be combined with Down Payment Assistance Programs (DPA) to go even lower than that 3%

Doing a higher downpayment can be beneficial for many reasons, such as lower Mortgage insurance (MI); MI is not required with a downpayment over 20%.

A credit score of approximately 620 is commonly associated with conventional financing, but a 620 score does not automatically guarantee approval. Requirements can vary based on the lender, automated underwriting findings, down payment, debts, reserves, property type and overall loan profile.

Credit scores may also affect the interest rate, mortgage-insurance cost and available loan structure. Buyers with lower scores should compare conventional financing with FHA and other possible options rather than assuming one program is automatically better.

Private mortgage insurance, commonly called PMI, is generally required when a buyer uses a conventional loan and puts less than 20% down. PMI protects the lender, but it allows qualified buyers to purchase a home without waiting until they have a full 20% down payment.

The cost of PMI can vary based on factors such as:

• Credit score

• Down payment

• Loan amount

• Property type

• Mortgage-insurance structure

PMI does not necessarily remain for the entire loan. For many conventional mortgages, homeowners may request cancellation when the loan balance is scheduled to reach 80% of the home’s original value, provided applicable requirements are met. PMI is generally scheduled to terminate automatically at 78% if the loan is current. Other cancellation options may depend on the loan investor, payment history and current property value.

Putting less than 20% down is not automatically a bad financial decision. I compare the PMI cost, monthly payment, cash required at closing and money remaining in reserves to help buyers choose the structure that fits their overall goals.

Learn more in my complete guide: What Is PMI and How Do I Remove It?

Many conventional loans require an appraisal to confirm the property’s market value and help identify potential collateral concerns.

However, some qualified transactions may receive an appraisal waiver or alternative valuation option through Fannie Mae or Freddie Mac’s automated underwriting systems. A waiver is not guaranteed and depends on the property, transaction, available data and underwriting findings.

Even when an appraisal waiver is available, buyers should understand that an appraisal is different from a home inspection. A home inspection evaluates the property’s condition for the buyer, while an appraisal primarily supports the lender’s collateral review.

Conventional loans can be used to finance several different types of properties, but the down payment, interest rate, reserve requirements and qualification guidelines may change depending on how the property will be used.

Primary residence

A primary residence is the home where you intend to live for most of the year. Primary-residence conventional loans generally provide the lowest down-payment options and most favorable financing terms. Some qualified buyers may be eligible for as little as 3% down.

Second home

A second home is typically a property you will personally occupy for part of the year, such as a vacation home. Second homes generally require a larger down payment than a primary residence and must meet specific occupancy and property requirements. A property primarily purchased to generate rental income may need to be financed as an investment property instead.

Investment property

An investment property is purchased primarily to generate rental income or build long-term wealth. Conventional investment-property loans generally require larger down payments, stronger credit profiles and additional financial reserves. The property type, number of financed properties and expected rental income can also affect qualification.

It is important to classify the property correctly. I help buyers compare the available options and structure the financing based on how they genuinely plan to use the home.

Learn more:

• Can I Buy a House While Owning Another Home?

• What Down Payment Is Needed for an Investment Property?

Seller credits are funds the seller agrees to contribute toward certain buyer expenses at closing. They can help reduce the buyer’s upfront cash requirement and may be used for eligible costs such as:

• Lender and closing fees

• Discount points

• Temporary or permanent interest-rate buydowns

• Prepaid homeowners insurance

• Prepaid property taxes

• Initial escrow deposits

The maximum conventional seller credit generally depends on the property’s occupancy and loan-to-value ratio:

• More than 90% loan-to-value: Up to 3%

• 75.01% to 90% loan-to-value: Up to 6%

• 75% loan-to-value or lower: Up to 9%

• Investment properties: Up to 2%

For example, a primary-residence buyer putting 3% or 5% down would generally be limited to a 3% seller credit.

Seller credits cannot be used for the buyer’s required down payment or reserve requirement. They also cannot exceed the buyer’s actual eligible closing costs. Any unused portion is generally forfeited, so the credit should be carefully calculated before it is written into the purchase contract.

A seller credit can sometimes benefit a buyer more than an equivalent price reduction, especially when the buyer wants to reduce cash needed at closing or use discount points to lower the mortgage payment.

Learn more in my complete guide: How Seller Credits Can Lower Your Payment

Conventional and FHA loans can both provide low-down-payment options, but they have different qualification requirements, mortgage-insurance structures and long-term costs.

Conventional loans are not government-backed and may work particularly well for buyers with stronger credit, stable income and lower debt-to-income ratios. Some qualified buyers may be eligible for as little as 3% down. Conventional private mortgage insurance is often influenced by the buyer’s credit and down payment, and it may eventually be removed when applicable requirements are met.

FHA loans are insured by the Federal Housing Administration and require a minimum down payment of 3.5% for many qualified buyers. FHA financing may provide additional flexibility for buyers with lower credit scores, higher debt-to-income ratios or previous credit challenges. FHA loans include upfront and annual mortgage insurance, and the annual mortgage insurance may remain for the life of the loan depending on the original down payment and loan term.

Other important differences can include:

• FHA allows up to 6% in eligible seller contributions.

• Conventional seller-credit limits depend on occupancy and loan-to-value ratio.

• FHA appraisals include minimum property requirements that may identify certain health, safety or condition concerns.

• Conventional financing can be used for primary homes, qualifying second homes and investment properties.

• FHA financing is generally limited to qualifying primary residences.

Neither loan is automatically better. I compare the interest rate, mortgage insurance, monthly payment, cash required at closing and long-term cost to determine which structure better fits the buyer.

Learn more:

• Explore FHA Home Loans

• FHA vs. Conventional Loan: Which Is Better?

Conforming and jumbo loans are both conventional mortgages, but the difference primarily comes down to the loan amount, not the home’s purchase price.

A conforming loan falls within the annual loan limits established by the Federal Housing Finance Agency and generally meets guidelines established by Fannie Mae or Freddie Mac. For 2026, the baseline conforming loan limit for a one-unit property is $832,750 in most areas, including most North Carolina and South Carolina counties.

A jumbo loan exceeds the applicable conforming loan limit. Jumbo financing is commonly used for higher-priced homes throughout areas such as:

• SouthPark

• Ballantyne

• Lake Norman

• Waxhaw

• Fort Mill

• Charlotte’s luxury-home market

Because jumbo loans are not purchased under standard Fannie Mae or Freddie Mac conforming guidelines, qualification requirements can vary considerably between lenders. Jumbo loans may require:

• Stronger credit

• Larger down payments

• Lower debt-to-income ratios

• Additional financial reserves

• More extensive income and asset documentation

A higher-priced home does not automatically require a jumbo loan. The classification is based on the final loan amount after subtracting the buyer’s down payment.

As a mortgage broker, I can compare conforming and jumbo options across multiple wholesale lenders because pricing, reserve requirements and qualification guidelines may differ substantially.

Learn more in my complete guide: Conforming vs. Jumbo Loans: What Carolina Buyers Need to Know

Yes, some buyers can use a conventional loan to purchase their next home before selling their current property. This is common for move-up buyers who want to avoid coordinating two closings or making an offer contingent on their existing home selling.

The most important question is whether the buyer can qualify while temporarily owning both properties. The lender may need to include:

• The current mortgage payment

• The proposed mortgage payment

• Property taxes and homeowners insurance

• HOA dues

• Other monthly debts

• Required financial reserves

Possible strategies may include:

• Qualifying while carrying both mortgage payments

• Using a HELOC or bridge loan to access existing equity

• Selling the current home before the new purchase closes

• Converting the current residence into a rental when applicable guidelines are met

• Making a larger down payment and potentially recasting the new mortgage after the current home sells

The best strategy depends on the buyer’s income, debts, available equity, reserves, timeline and comfort with temporarily carrying two properties. Before making an offer, I compare the payment and cash-to-close options so the buyer understands the complete financial picture.

Learn more:

• Can I Buy a House Before Selling Mine?

• Can I Buy a House While Owning Another Home?

Do I have to be a first-time homebuyer to get a conventional loan?

No. Conventional loans are available to first-time buyers, repeat buyers, move-up buyers, second-home buyers and real estate investors. However, certain 3% down conventional programs may have first-time-homebuyer or income requirements.

What is the minimum down payment for a conventional loan?

Some qualified buyers may be eligible for as little as 3% down. A 5% down payment is common for many other primary-residence purchases. Second homes, investment properties and certain property types generally require larger down payments.

What credit score is needed for a conventional loan?

A score of approximately 620 is commonly associated with conventional financing, but meeting that number does not guarantee approval. Credit history, income, debts, down payment, reserves and automated underwriting findings are also considered.

Can I get a conventional loan with less than 20% down?

Yes. Many buyers use conventional loans with 3%, 5%, 10% or 15% down. Private mortgage insurance is generally required when the down payment is less than 20%, but the cost varies based on the complete loan profile.

Can conventional mortgage insurance be removed?

In many cases, yes. Homeowners may be able to request PMI cancellation when the loan reaches applicable equity and payment-history requirements. Borrower-paid PMI is also generally scheduled to terminate automatically at 78% of the home’s original value when the loan is current.

Can I use gift funds with a conventional loan?

Gift funds may be allowed for eligible primary-residence or second-home transactions when the donor, transfer and documentation satisfy conventional guidelines. Buyers should speak with their lender before moving gift money.

Can the seller pay my closing costs?

Yes. Conventional loans allow seller credits, but the limit depends on the occupancy type and loan-to-value ratio. Seller credits can generally cover eligible closing costs, prepaid expenses and interest-rate buydowns, but they cannot replace the required down payment.

Can I use a conventional loan for an investment property?

Yes. Conventional financing can be used for qualifying rental and investment properties. These loans generally require larger down payments, stronger financial profiles and additional reserves compared with primary-residence financing.

Does every conventional loan require an appraisal?

Not necessarily. Some transactions may receive an appraisal waiver or alternative valuation through the automated underwriting system. Availability depends on the property, transaction and information available to Fannie Mae or Freddie Mac.

How quickly can a conventional loan close?

The timeline depends on documentation, appraisal requirements, title work and the borrower’s overall situation. A thoroughly reviewed preapproval and quick document submission can help avoid unnecessary delays.

Is a conventional loan always better than an FHA loan?

No. Conventional financing may be more attractive for some buyers, while FHA may offer greater flexibility for others. The best comparison includes the interest rate, mortgage insurance, payment, cash required and long-term cost—not just the down payment.

Learn more about the overall requirements in my Conventional Loan Requirements in Charlotte guide.