Conventional home loans are one of the most widely used mortgage options for homebuyers across Colorado. Whether you’re purchasing a primary residence, a vacation home in the mountains, or an investment property in the city, conventional financing offers flexible options, competitive interest rates, and long-term value, especially for borrowers with strong credit and stable income.
At Choice Mortgage Group in Centennial, we help clients understand how conventional loans work, whether it’s your first home purchase or you’re refinancing an existing loan to better terms.
For answers to common questions, view our Conventional Loan FAQs.
What Is a Conventional Loan?
A conventional loan is a type of mortgage that isn’t backed by the government, unlike FHA, VA, or USDA loans. Instead, these loans follow lending guidelines set by Fannie Mae and Freddie Mac. This gives borrowers a wider range of options when it comes to property types, loan terms, and repayment strategies.
Conventional loans can be used to buy or refinance a variety of properties, including single-family homes, townhomes, condos, and 2- to 4-unit residences. They’re available for primary homes, second homes, and investment properties, giving buyers the flexibility to build their real estate portfolio at their own pace.
Conventional Loan Limits for 2025 in Arapahoe County
Each year, the Federal Housing Finance Agency (FHFA) updates conforming loan limits to reflect changes in home prices. For 2025, the conventional loan limit in Arapahoe County, including Centennial, is $833,750 for a one-unit property.
This means that borrowers purchasing or refinancing a home at or below this amount can qualify for standard conforming loan terms. If your loan amount exceeds this limit, you may still be eligible for a high-balance or jumbo loan, which comes with slightly different guidelines.
Who Should Consider a Conventional Loan?
Conventional loans are best suited for borrowers who have solid credit, verifiable income, and at least a modest down payment saved. Typically, borrowers with credit scores of 680 or higher will receive the most favorable interest rates and terms.
These loans offer a strong alternative to government-backed financing for buyers who meet the qualifying criteria. In many cases, especially for borrowers who can put down at least 20%, conventional loans offer lower long-term costs by avoiding mortgage insurance altogether.
Qualifying Guidelines
To be approved for a conventional mortgage, lenders evaluate several core areas of your financial profile. Credit score is a major factor—while conventional loan programs allow for credit scores as low as 620, most borrowers will benefit from having a score of 680 or above.
Your income must be fully documented and stable, with a debt-to-income (DTI) ratio typically not exceeding 50%. Some exceptions may apply if other parts of your application, like credit or assets, are particularly strong.
Assets are also reviewed closely. For most primary home purchases, lenders want to see at least two months’ worth of mortgage payments (known as reserves) in your bank or retirement accounts. If you’re buying a vacation home or investment property, expect to show additional reserves, three to six months is common. All funds must be documented and “seasoned,” meaning the money has been in your account for at least 60 days before closing.
Loan Structure and Program Options
Conventional loans are available in a variety of repayment structures, allowing borrowers to customize their loan to match their financial goals. Fixed-rate loans, typically in 15- or 30-year terms, offer predictability and long-term peace of mind, while adjustable-rate mortgages (ARMs) provide lower initial rates that may work well for short-term homeowners or those expecting their income to grow.
In addition to home purchases, conventional loans are also available for rate-and-term refinancing (to reduce your interest rate or change your loan term), as well as cash-out refinancing, which allows you to access your home’s equity for renovations, investments, or other financial needs.
At Choice Mortgage Group, we specialize in helping Colorado homebuyers navigate the mortgage process with confidence. If you’re ready to explore your options, get pre-approved, or simply ask a few questions about conventional financing, we’re here to help with personalized guidance and fast answers.
We offer pre-approvals in less than 24 hours and provide honest advice based on your unique financial situation, no pressure, no obligation.
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Conventional Home Loan FAQs
A conventional loan is a mortgage not insured or guaranteed by a government agency like the FHA or VA, instead being backed by private lenders. These loans adhere to lending guidelines set by Fannie Mae and Freddie Mac.
The conventional loan limit in Colorado, like most of the U.S., is typically set annually by the Federal Housing Finance Agency (FHFA) for conforming loans. For 2025, the standard limit for a single-family home in most of Colorado is $806,500, though some high-cost areas may have higher limits. For example, the loan limit in the Denver Metro counties (Adams, Araphanoe, Jefferson, Denver, Douglas, Broomfield) is $833,750 in 2025.
No, not all conventional loans require a 20% down payment; many programs allow for down payments as low as 3% to 5%. However, putting less than 20% down typically means you will need to pay private mortgage insurance (PMI).
For a conventional loan in Colorado, lenders generally look for a minimum credit score of 620 to 640. A higher credit score will usually qualify you for better interest rates and more favorable loan terms.
Conventional loans offer more flexibility in terms of property types and can have slightly less stringent appraisal requirements than government-backed loans. A significant advantage is that Private Mortgage Insurance (PMI) can often be removed once you reach 20% equity, unlike FHA loans.
A primary disadvantage is that conventional loans typically require a higher credit score and a lower debt-to-income ratio compared to FHA loans. If you put down less than 20%, you will also be required to pay Private Mortgage Insurance (PMI) until you build sufficient equity.
