A conventional home loan is a mortgage that is not backed by a government program such as FHA or VA. For many Colorado buyers, it can be a strong fit when they have solid credit, want flexible down payment options, or are comparing monthly costs that may include PMI. It can also be important to understand how county-based conforming loan limits affect whether a loan stays conventional or crosses into jumbo territory.
This guide explains the basics of conventional home loans in Colorado, including how PMI works, what lenders look at when reviewing an application, and how loan limits can shape your options.
Here are a few common questions that borrowers tend to have about conventional mortgages.
A conventional mortgage is one that is not backed by the government. This type of loan differs from other loan types, like FHA loans and VA loans, which are insured by the government.
For this reason, conventional loans are a bit riskier for lenders who offer them because they are not insured by the government. That’s why borrowers who apply for a conventional home loan in Colorado will have to meet slightly more stringent lending criteria in order to minimize the risk for the lender.
Conventional loans are not government-backed, but that does not mean PMI is what “backs” the loan. Instead, Private Mortgage Insurance (PMI) is typically required on a conventional loan when a borrower puts down less than 20%. The practical takeaway for borrowers is that PMI protects the lender, while the borrower pays for it as part of the cost of financing with a smaller down payment.
If you put down at least 20% of the purchase price, you can generally avoid PMI on a conventional loan. If your down payment is below that threshold, you may need to pay Private Mortgage Insurance (PMI) until you build enough equity.
You’ll need to put down at least 20% of the purchase price of the home you are buying in order to avoid having to pay mortgage insurance. Otherwise, you’ll need to pay Private Mortgage Insurance (PMI), which is provided by an insurance company in the private sector, rather than the government.
If you cannot come up with a 20% down payment, you may eventually be able to get rid of PMI when you have at least 20% equity in your home. Once you have managed to pay down your mortgage balance to 80% of your home’s original appraised value, you can ask your lender to cancel your PMI. Otherwise, once your balance dips down to 78% of the value, your lender is required to eliminate PMI.
Every year, the Federal Housing Finance Agency (FHFA) establishes a new set of “loan limits” for conventional loans that reflects the change in average home prices. The conforming loan limits take effect on the first day of January every year and are assigned on a county-to-county basis. That means one county in the same state may have a different loan limit for the respective year than another, based on the change in home prices in the area.
In 2026, the conforming loan limit in Colorado for most counties is $832,750. In more expensive counties, single-family conforming loan limits are higher. For instance, loan limits in Arapahoe, Boulder, and Garfield counties in 2026 are $862,500, $879,750, and $1,209,750, respectively.
If you take out a conforming loan that is over these thresholds, your loan would be considered a “jumbo loan.” Because conforming loan limits vary by county, it’s important to compare the home price and loan amount you need against the limit that applies where you plan to buy. Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
Check out our mortgage loan limit tool for conventional, FHA, and VA loans.
Lenders look at conventional loan eligibility as a full borrower profile rather than a single checkpoint. Credit, down payment, income, and debt all work together, and strength in one area may help support weakness in another depending on the loan scenario and lender guidelines.
Credit scores. A credit score of at least 620 is generally required to get approved for a conventional home loan, though all other factors — including income and down payment — will need to be strong. Otherwise, it’s suggested that you go into a loan application with a higher credit score to increase your chances of approval.
Down payment size. A higher down payment amount may strengthen your application, as it reduces your loan-to-value ratio (LTV) and ultimately lowers the risk to the lender. For a conventional loan, a minimum 3% down payment is required.
Income. As with any other type of mortgage, your income will be looked at to ensure you earn enough to support a mortgage payment.
Debt levels. Your current debt will be assessed to make sure that you’re not overstretching your finances to squeeze in another bill payment into your budget.
In practical terms, borrowers with stronger credit, more money down, steadier income, or lower existing debt may have an easier time qualifying. If one part of your file is less competitive, stronger compensating factors elsewhere may matter. As mentioned earlier, the requirements for a conventional loan tend to be a little more stringent than a government-backed loan, such as an FHA loan. If you lack the credit score needed to get approved for a conventional loan, you may want to look into an FHA loan to finance a home purchase.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
No. A conventional loan can require as little as 3% down, depending on the loan scenario and lender guidelines. A 20% down payment is important mainly because it generally lets you avoid PMI.
Private Mortgage Insurance, or PMI, is typically required on a conventional loan when the borrower puts down less than 20%. PMI protects the lender, while the borrower pays for it as part of the cost of financing with a smaller down payment.
You can generally ask your lender to cancel PMI once your mortgage balance reaches 80% of your home’s original appraised value. If it is not removed earlier, the lender is generally required to eliminate PMI once the balance reaches 78% of that value.
A conventional loan is not backed by a government program, so lenders usually apply more stringent qualification standards. Borrowers may need stronger credit, a solid income profile, manageable debt, and in some cases PMI if they put down less than 20%.
Conventional loans can be harder to qualify for than some government-backed options because lenders review the full borrower profile closely. Credit score, down payment, income, and debt all matter, and stronger factors in one area may help offset a weaker area depending on the loan scenario.
A credit score of at least 620 is generally required for a conventional home loan. Approval still depends on the rest of the application, including income, debt, and down payment, and a higher score may improve the chances of qualifying.
In Colorado, lenders typically look at the same core factors used for conventional loans more broadly: credit score, down payment, income, and debt levels. The article notes that 3% is the minimum down payment for a conventional loan and that a 620 credit score is generally required, with stronger overall finances helping support approval.
In 2026, the conforming loan limit in Colorado depends on the county. The article states that most counties use the standard Colorado conforming limit shown in the loan-limit field, while higher-cost counties such as Arapahoe, Boulder, and Garfield have higher single-family conforming limits.
A conventional loan becomes a jumbo loan when the loan amount goes above the conforming loan limit for the Colorado county where the home is located. Because those limits vary by county, the same loan amount may be conforming in one county and jumbo in another.
On a conventional loan, PMI is generally tied to making a down payment below 20%, and it may be removed later when enough equity is built. The article suggests comparing that structure with FHA mortgage insurance costs, since some borrowers may find conventional financing more appealing for that reason.
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