Conventional Loans in San Luis Obispo County | Competitive Rates
The most widely used mortgage in America — flexible, competitive, and available for primary homes, second homes, and investment properties.
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Who Is a Conventional Loan Best For?
Conventional loans are the most flexible mortgage product available — no restrictions on property type, no permanent mortgage insurance, and the widest range of term and down payment options. They're the go-to for buyers with solid credit and stable income.
This loan fits if you are…
- Buyers with credit scores of 620 or higher (best rates at 740+)
- Buyers who want to purchase a second home or investment property
- First-time buyers putting as little as 3% down
- Buyers with 20%+ down who want to avoid PMI entirely
- Buyers refinancing to remove FHA mortgage insurance
Key Benefits
Loan Requirements at a Glance
| Requirement | Standard |
|---|---|
| Minimum credit score | 620 minimum; best rates at 740+ |
| Minimum down payment | 3% for first-time buyers; 5% for repeat buyers |
| PMI requirement | Required if down payment < 20%; cancels at 80% LTV |
| Conforming loan limit | $1,209,750 (SLO County 2025) |
| Property types | Primary, second home, or investment property |
| Loan terms | 10, 15, 20, 25, or 30 years |
Pros & Cons
Advantages
- PMI is temporary — drops automatically at 80% LTV
- Available for second homes and investment properties
- Flexible term options: 10, 15, 20, 25, or 30 years
- No upfront mortgage insurance premium
- Widest range of lender competition for best rate
Considerations
- Requires 620+ credit score (FHA allows 580+)
- Stricter debt-to-income guidelines than FHA
- Higher rates for lower credit scores vs. FHA
- Higher down payment requirements for investment properties (15–25%)
- No government backing — slightly higher rates for some scenarios
FAQs
Conventional loan rates are priced in tiers by credit score. The best rates are reserved for borrowers with 740+ FICO. There are meaningful rate jumps at 720, 700, 680, and 660. Even at 680, conventional rates are often still competitive — and we'll show you exactly how your score affects the rate on your specific loan scenario so you can make an informed decision about whether it's worth waiting to improve your score.
The key differences: conventional loans require a higher minimum credit score (620 vs. 580), have PMI that automatically cancels at 80% LTV (while FHA MIP can be permanent), can be used for investment properties and second homes (FHA is primary residence only), and have no upfront mortgage insurance premium. For buyers with solid credit, conventional is almost always the better long-term choice due to the cancellable PMI.
Yes. Conventional loans allow as little as 3% down for first-time buyers and 5% for repeat buyers. You'll pay PMI if your down payment is under 20%, but unlike FHA mortgage insurance, conventional PMI is temporary — it automatically cancels once you reach 20% equity through payments or home appreciation. Many SLO County buyers put 5–10% down to preserve cash, knowing PMI will drop off as home values continue to appreciate.
In 2025, the conforming loan limit in SLO County is $1,209,750 — significantly higher than the national baseline due to the county's high home values. Loans above this limit require jumbo financing. For most SLO County buyers outside the most expensive coastal communities, a conventional conforming loan will accommodate their purchase price. We'll confirm the applicable limit for your specific scenario.
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