Conventional Loans in Michigan

What "conventional" actually means

A conventional loan is simply any mortgage that isn't backed by a government agency. There's no FHA insurance behind it, no VA guarantee, no USDA program. Instead, the overwhelming majority of conventional loans are written to the rulebook published by Fannie Mae and Freddie Mac — the two government-sponsored enterprises that buy mortgages from lenders and package them for investors. When a loan meets those guidelines, it's called a conforming loan, and that's the product most Michigan buyers are quoted.

Why does that matter to you? Because Fannie and Freddie standardize the rules, conventional loans are essentially a commodity. Every lender is pricing the same underwriting box, so the differences come down to pricing, fees, and how well your file is packaged. That's the opposite of the Non-QM world, where guidelines vary wildly from lender to lender. For most W-2 borrowers with clean credit, conventional is the default — and often the most affordable — path to a home.

A conforming conventional loan is one of several tools I write. If your income is harder to document, the Non-QM loans hub covers the alternatives; this page is about the plain-vanilla loan that fits the largest share of buyers.

Fannie Mae, Freddie Mac, and why the limit exists

Fannie Mae and Freddie Mac don't lend money directly. They buy closed loans from lenders, which frees those lenders to turn around and fund the next borrower. To keep that machine running smoothly, the Federal Housing Finance Agency caps the size of the loans they'll buy each year — the conforming loan limit. A loan at or under the limit can be sold to Fannie or Freddie; a loan above it cannot, which is what makes it a jumbo loan instead.

For you as a borrower, the practical upshot is that conforming loans tend to be the smoothest, most predictable mortgages out there. The guidelines are public, the underwriting is automated through Fannie's and Freddie's systems, and lenders compete hard for these files. My job as a broker is to take your conventional file to the wholesale lenders who price it most aggressively that week.

How little can you put down? As little as 3%

The old myth that you need 20% down to buy a home is just that — a myth. Conventional financing offers low-down-payment programs that let qualified buyers put down as little as 3% on a primary residence, with 5% being another common tier. A first-time buyer with solid credit can step into a Michigan home for a fraction of what most people assume they need saved.

Twenty percent still has its place. Putting 20% down means no mortgage insurance at all, a smaller loan balance, and a lower monthly payment. But it is not a requirement, and for many buyers, getting into a home sooner with 3–5% down — while they keep cash in reserve — is the smarter move. The right answer depends on your savings, your timeline, and what you're buying. I'll run both scenarios side by side so you're choosing with real numbers, not a rule of thumb.

A quick note for Michigan first-time buyers: a conventional loan can start with as little as 3% down, so you don’t always need 20% saved. What I do is help you structure the loan around the cash you actually have — and shop it across 50+ lenders to fit your numbers.

Private mortgage insurance, explained honestly

When you put down less than 20% on a conventional loan, the lender requires private mortgage insurance, or PMI. It's a monthly cost added to your payment that protects the lender — not you — in case of default. It exists for one simple reason: it's the trade-off that lets you buy with a smaller down payment instead of waiting years to save up 20%.

Here's the part that matters most, and the part lenders too often skip: PMI is not permanent. On a conventional loan, once your equity reaches a certain threshold as you pay the balance down, PMI drops off — either automatically or by request once you've built enough equity. That's a genuine advantage over FHA financing, where mortgage insurance can stick around for the life of the loan in many cases. If you're weighing the two, my FHA loans page lays out the comparison.

I'm deliberately not quoting a PMI cost here, because it depends on your credit score, down payment, and loan amount — any figure I printed would be wrong for your file. The honest version is a quick conversation where I show you the real number for your scenario.

Credit and debt-to-income, in plain ranges

Conventional underwriting leans on two numbers more than any others: your credit score and your debt-to-income ratio. Treat the ranges below as honest guidelines, not promises — the exact thresholds shift by program, down payment, and the rest of your file.

• Credit score: a 620 score is the common conventional floor. Scores in the 700s generally unlock the best pricing and the lowest mortgage-insurance cost, and the gap between a 660 file and a 760 file is real money over the life of the loan.
• Debt-to-income (DTI): most conventional files land under roughly 43%, and automated underwriting will sometimes stretch to around 50% when the rest of the picture is strong — good credit, solid reserves, a healthy down payment.
• Reserves: some scenarios ask for a few months of housing payments in the bank after closing, scaling with loan size and property type.
• Income documentation: conventional loans want fully documented income — pay stubs, W-2s, and tax returns. If that's the friction point, a bank-statement program may fit better.

If your score is close to a cutoff or your DTI is borderline, that's exactly where shopping 50+ lenders earns its keep — one lender's "no" is often another's "yes" on the identical file.

2026 Michigan conforming limits — conforming vs. jumbo

The line between a conventional conforming loan and a jumbo loan is a dollar figure: the conforming loan limit. For 2026, the baseline one-unit conforming limit across Michigan is $832,750. Every major county in the state — including the entire metro Detroit and mid-Michigan corridor — sits at that baseline; Michigan has no designated high-cost counties that carry a higher ceiling.

Borrow at or below $832,750 and you're in conventional conforming territory. Need more than that — common in Oakland County's higher-end markets like Birmingham and Bloomfield Hills — and you cross into a jumbo loan, which carries its own underwriting and reserve requirements. I write both, so the threshold doesn't have to box you in; it just changes which program we use.

Why use a broker for a "commodity" loan?

It's a fair question. If conventional loans are standardized, why not just walk into a bank? Because standardized guidelines don't mean standardized pricing. A retail bank has one rate sheet and one fee structure. Atlantis Mortgage is a wholesale brokerage — I take your conventional file to more than 50 wholesale lenders and let them compete for it. On a commodity loan, that competition shows up directly in your pricing and your closing costs.

It also matters at the edges. A file that's a clean approval at one lender might trip a different lender's overlay — the extra rules individual lenders layer on top of Fannie and Freddie's baseline. Knowing which lenders have which overlays is the difference between a smooth close and a deal that dies in underwriting. After 28 years and more than $2 billion funded, I usually know within a phone call where your file belongs.

And at every step, you're talking to me — Jason Yourofsky, NMLS #137016 — not a rotating cast of processors.

Conventional loan FAQ

Straight answers to the questions Michigan buyers actually ask me.

What is a conventional mortgage?

A conventional mortgage is a home loan that is not backed by a government program like FHA, VA, or USDA. Most conventional loans follow Fannie Mae and Freddie Mac guidelines, and when a loan meets those guidelines it is called a conforming loan. For Michigan buyers with steady income and decent credit, conventional financing is usually the most flexible and affordable option.

How much do I need to put down on a conventional loan?

Qualified buyers can put down as little as 3% on a primary residence, with 5% being another common tier. You do not need 20% down to buy a home. Putting 20% down does eliminate private mortgage insurance and lowers your payment, but for many buyers, getting into a home sooner with 3 to 5% down while keeping cash in reserve is the smarter move.

Does a conventional loan require PMI, and does it ever go away?

Conventional loans require private mortgage insurance, or PMI, when you put down less than 20%. The key advantage is that PMI is not permanent on a conventional loan. Once you build enough equity as you pay the balance down, PMI drops off, either automatically or by request. That is different from FHA financing, where mortgage insurance can last the life of the loan in many cases.

What credit score and debt-to-income ratio do I need?

A 620 credit score is the common conventional floor, and scores in the 700s generally unlock the best pricing and the lowest mortgage-insurance cost. Most conventional files keep debt-to-income under roughly 43%, though automated underwriting will sometimes stretch toward 50% when credit, reserves, and the down payment are strong. Because Atlantis Mortgage shops more than 50 wholesale lenders, a file one lender turns down can still fit another.

What is the 2026 conventional loan limit in Michigan?

For 2026, the baseline one-unit conforming loan limit across Michigan is $832,750, and every major county — including Wayne, Oakland, Macomb, Washtenaw, Kent, Livingston, Genesee, and Ingham — sits at that baseline. Michigan has no designated high-cost counties with a higher ceiling. Borrow above $832,750 and the loan becomes a jumbo loan with its own underwriting requirements.

Should I use a broker for a conventional loan?

Yes — standardized guidelines do not mean standardized pricing. A retail bank has one rate sheet, while a wholesale broker takes your file to 50+ lenders that compete for it, which shows up directly in your pricing and closing costs. A broker also knows which lenders carry which overlays, the extra rules layered on top of Fannie and Freddie guidelines, which is often the difference between a clean approval and a deal that stalls.