Conventional Loans in California: 2026 Requirements & Limits

I’m Michael DiVita (DRE #01372066 | NMLS #241655), owner of DiVita Home Finance (DRE #01818285 | NMLS #323700) in Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. Conventional loans are the workhorse of the California mortgage market, and as a broker I can shop yours across 40+ wholesale lenders. Call (800) 239-1103.

A conventional loan is a mortgage that isn’t insured by a government agency. In California in 2026 you can buy with as little as 3% down, borrow up to your county’s conforming limit ($832,750 to $1,249,125 for a single-family home), and drop mortgage insurance once you reach 20% equity. It works for first-time buyers, move-up buyers, second homes and investment properties.

What Is a Conventional Loan?

A conventional mortgage is any home loan not backed by FHA, VA or USDA. Most are conforming loans that follow Fannie Mae and Freddie Mac guidelines and stay within the county loan limit. Loans above the limit are jumbo loans, which are also conventional but follow each lender’s own rules.

2026 Conforming Loan Limits in California (1-Unit)

See the full county guide for 2–4 unit limits.

Conventional Loan Requirements in California

• Credit score: Fannie Mae’s Desktop Underwriter dropped its hard 620 minimum in November 2025, but most lenders still require about 620, and manually underwritten loans still do. Pricing improves at each tier up to 780+.
• Down payment: 3% for first-time buyers or HomeReady/Home Possible borrowers on standard loan amounts; 5% for most other primary-residence purchases, including high-balance loans.
• Debt-to-income ratio: up to 50% with an automated approval.
• Private mortgage insurance: required with less than 20% down. You can ask to cancel it when your balance reaches 80% of the original value, and it ends automatically at 78%.
• Reserves: depend on the automated findings, the property type and how many financed properties you own.

Down Payment Options

Conventional vs. FHA in California

My rule of thumb: with credit around 700 or higher, conventional usually wins because PMI is cheaper and it goes away. With credit in the 600s, FHA is often cheaper month to month. I price both before recommending either. More detail is in my FHA vs. conforming comparison.

High-Balance Conventional Loans

In counties with limits above $832,750, loans between the baseline and the county limit are high-balance conforming. They follow Fannie/Freddie guidelines with a modest pricing adjustment. Two differences to plan for: the 3% down programs aren’t available (5% is the minimum on a one-unit primary residence), and high-balance multi-unit purchases need more down than standard loans. In the ten ceiling counties, high-balance conforming goes up to $1,249,125.

Duplexes, Triplexes and Fourplexes (House Hacking)

Buying a 2–4 unit property and living in one unit is one of the best entry points into California real estate, because rent from the other units helps you qualify.

• Conventional: on standard loan amounts, Fannie Mae allows as little as 5% down on an owner-occupied 2–4 unit purchase with an automated approval. High-balance 2–4 unit loans require more — roughly 15% down on a duplex and 25% on a triplex or fourplex.
• FHA: 3.5% down with 580+ credit, using the same high-cost 2–4 unit loan limits as conforming in ceiling counties. Triplexes and fourplexes must also pass FHA’s self-sufficiency test (75% of the rents must cover the full housing payment).
• VA: eligible veterans can buy a 2–4 unit property with zero down if they live in one unit.

How rental income counts: lenders generally use 75% of the gross rent from the units you won’t occupy, taken from existing leases or the appraiser’s market rent estimate. If the other side of a Marin duplex rents for $2,800 a month, about $2,100 counts toward qualifying.

2–4 unit properties are scarce in the Bay Area and competition for them is intense, so a fully underwritten pre-approval makes a real difference when one comes up.

Second Homes and Investment Properties

• Second home: usually 10% down; it must be a one-unit property you occupy part of the year and can’t be rented full time.
• Investment property: typically 15% down on a one-unit property and 25% on 2–4 units, with higher pricing than owner-occupied loans.
• When conventional doesn’t fit: investors whose tax returns don’t show enough income can use a DSCR loan, which qualifies on the property’s rent instead of personal income.

When a Conventional Loan Makes Sense

• Your credit is around 700 or higher
• You want mortgage insurance you can eventually remove
• You’re buying a second home or investment property
• The home needs cosmetic work that could trip FHA’s property standards
• Your price is above your county’s FHA limit but inside the conforming limit (common in Sacramento, the Inland Empire and the Central Valley)

And when the bank says no — self-employed income, a recent credit event, a non-warrantable condo — that’s where I come in with non-QM options.

Frequently Asked Questions

What is the minimum down payment for a conventional loan in California?

3% for first-time buyers (Conventional 97) or income-eligible borrowers (HomeReady and Home Possible) on loans up to $832,750. Most other primary-residence purchases, including high-balance loans, need at least 5% down.

What credit score do I need for a conventional loan?

Most lenders require about 620. Fannie Mae removed the hard 620 floor from Desktop Underwriter in November 2025, but lender overlays and manual underwriting still commonly use 620. Pricing is best at 780 and above.

When does PMI go away on a conventional loan?

You can request cancellation when your balance reaches 80% of the home’s original value, provided you have a good payment history. It ends automatically when the balance is scheduled to reach 78%. Some lenders also allow removal based on a new appraisal after your home has appreciated.

How much do I need down on a duplex with a conventional loan?

If you live in one unit and the loan is at or below the baseline 2-unit limit of $1,066,250, Fannie Mae allows as little as 5% down with an automated approval. High-balance duplex loans generally require about 15% down. FHA is 3.5% down on duplexes up to the county’s FHA limit.

Can I use rental income from the other units to qualify?

Yes. For an owner-occupied 2–4 unit purchase, lenders generally count 75% of the gross rents from the units you won’t live in, based on current leases or the appraiser’s market rent estimate.