For home buyers
Conventional Loans in Michigan
A conventional loan is a mortgage that is not backed by a government agency. It fits buyers with steady credit and income.
- No credit pull to talk
- Licensed mortgage broker, NMLS 2041154
Conventional Loan
Key benefits
Flexible Down Payments
Low down payment options, with the smallest minimums for first-time buyers and the income-based programs.
Mortgage Insurance That Comes Off
You can ask to cancel borrower-paid mortgage insurance once the balance reaches 80% of the home’s original value, and it ends automatically when the balance is scheduled to reach 78%, if your payments are current.
No Upfront Mortgage Insurance
Unlike FHA, there is no upfront premium added to the loan.
When conventional is the right call, and when it is not
Conventional is the default for a reason: no upfront mortgage insurance premium. But six common situations beat it outright, and it is worth knowing which one you are in before you apply.
| Your situation | Conventional | Better fit |
|---|---|---|
| Credit below 620 | Usually declined, and priced poorly just above the line. | FHA, which goes to 580 with a low down payment and to 500 with more down. |
| You are eligible for a VA loan | Works, but unless you put enough down to avoid it, you pay mortgage insurance a VA borrower never pays. | VA. No monthly mortgage insurance and down payment options for eligible borrowers; a funding fee applies unless you are exempt. |
| Household income under the area cap | Standard mortgage insurance pricing applies. | HomeReady or Home Possible. The same low down payment, with reduced mortgage insurance. |
| Borrowing above the conforming limit | Cannot be done. The limit is the definition. | Jumbo, which starts exactly where conforming stops. |
| Self-employed and writing off most of your income | Qualifies on your tax returns, which is the problem. | Bank statement, which qualifies on deposits instead. |
| Buying a rental you want judged on its own rent | Counts the new payment against your personal debt ratio. | DSCR, which qualifies on the property's rent instead of your personal income. |
Talk through which loan fits me
Guidelines
Guidelines for this loan
What conventional lenders usually check. Fannie Mae and Freddie Mac set the outer limits; each lender can be stricter.
Credit Score
Set by the lender; many look for 620 or higher.
Read the guideDTI
Many lenders look for total monthly debts, the new payment included, at or under 43% to 45% of income; conventional files can reach 50% with strong credit or reserves.
Read the guideLoan Limit
Must fall within the conforming loan limit: $832,750 for a one-unit home in every Michigan county in 2026.
Read the guideClosing Costs
Paid on top of the down payment and listed line by line on your Loan Estimate; seller or lender credits can cover part of them.
Read the guideLoan Term
Shorter and longer terms are available.
Read the guideOfficial sources
Check the rules at the source
Program guidelines change. These are the official pages we check them against.
Questions about this loan
If yours is not here, ask it on the call. There are no dumb questions.
What is the difference between a conventional and an FHA loan?
FHA loans are government-backed with easier qualifications, but when the loan starts above 90% of the home’s value their mortgage insurance lasts for the life of the loan, and at 90% or less it lasts 11 years. That is the main reason conventional often costs less over time for borrowers who qualify for both; the question below covers when its mortgage insurance ends.
Can the whole down payment be a gift?
Yes. You can use gift funds for your down payment and closing costs, though restrictions may apply depending on the property type and loan structure.
Is there an income limit on a conventional loan?
Not for standard conventional loans. However, some low down payment programs like HomeReady® and Home Possible® have income limits.
Can I use this for a second home?
Yes. Conventional loans can be used for second homes and investment properties, with stricter down payment and reserve rules than for a home you live in.
When does PMI actually come off a conventional loan?
You can ask the servicer to cancel it once the balance reaches 80% of the home’s original value, and it ends automatically when the balance is scheduled to reach 78%, as long as your payments are current. A rise in value can count too, under the servicer’s rules on how long you have owned the home and with a new appraisal. On an FHA loan that starts above 90% of the home’s value, the insurance never leaves.
What does Michigan add to a conventional purchase?
The tax line. The year after a Michigan home sells, its taxable value resets to half of the assessor’s market value, so the seller’s tax bill is not your tax bill. Estimate the tax for an address before you settle on a price, because the payment you qualify on includes it.
What our clients say
Align Lending helped make purchasing my home in Madison Heights a smooth experience. I appreciated the regular updates and clear explanations along the way.
Want to shout out Samantha for the expert guidance, made my first-time homebuyer experience seamless! It exceeded expectations and was a stress free process throughout. Grateful for all your help and loving my new home in Bloomfield Hills!
I highly recommend Align Lending to anyone looking for a mortgage broker in Southeast Michigan. The team was knowledgeable, responsive, and easy to work with.
Individual experiences. Results vary.
Ask Samantha whether this loan fits
Bring your credit picture, your savings and the price range you have in mind. Samantha will tell you whether conventional fits, or whether one of the six situations in the table points somewhere else.
- 1
Tell us what you are trying to do
Not what product you want. What you are actually trying to accomplish.
- 2
We look at your situation
Samantha works out what matters most for you specifically.
- 3
You leave with a plan
Your options, the tradeoffs, and your next step. No obligation to go further.
Align Lending LLC, NMLS #2041154, is a mortgage broker. Samantha Shelton, NMLS 1647301. Equal Housing Opportunity. Licensed in Michigan, Ohio, North Carolina, Florida, Louisiana and Texas. Program guidelines on this page are general and change over time; they are not a credit decision, a preapproval, a commitment to lend, or an offer of credit. Approval depends on your full application, the property and the lender's current guidelines.
