Conventional Loan

About this program

How it works — step by step

1. 1

   Take the 60-second check-in

   Five questions about how you earn and what you're buying. If your income qualifies on a full documentation conventional path, the matcher will surface it — and if not, it'll show you which Non-QM program bridges the gap.

2. 2

   Gather two years of tax returns

   Conventional underwriting for self-employed borrowers requires two years of personal and business tax returns (1040 + Schedule C, K-1, or 1120-S), a year-to-date profit & loss, and 2–3 months of bank statements. W-2 borrowers need just two years of W-2s and pay stubs.

3. 3

   Licensed MLO reviews the file

   A Sunrise loan officer confirms that your income, credit, and assets meet conventional guidelines. If the conventional path produces lower qualifying income than a Non-QM alternative, the officer will walk you through both options.

4. 4

   Agency underwriting

   Conventional files run through automated underwriting (Desktop Underwriter / Loan Product Advisor). For self-employed borrowers, income is calculated using Schedule C net or K-1 distributions with standard add-backs — no expense-factor flexibility.

5. 5

   Close and fund at agency rates

   Conventional loans typically close in 21–45 days. When the file fits the agency box, this path usually offers the lowest available rate and the widest range of property types and down-payment options.

What it usually looks like

• Two years of self-employment in the same field (or two years of W-2 if not self-employed)
• Two years of personal and business tax returns for self-employed borrowers
• Credit score typically 620+ (best pricing at 740+)
• Down payment as low as 3% for first-time buyers; 5–20% for repeat buyers
• PMI required if less than 20% down (cancels at 20% equity)
• Loan amount at or below conforming limits (as of 2026: $766,550 standard, $1,149,825 high-cost)
• Debt-to-income ratio ≤ 43–45% (sometimes up to 50% with compensating factors)
• Reserves: 2+ months PITIA typical; higher for investment properties

How it compares

Program terms, LTV limits, and documentation requirements vary by lender. As of June 2026. Not a commitment to lend.

Real scenarios

Who this fits

• Mortgage for an Established SMB Owner

  See if this fits

• Mortgage for a Dual-Income Household

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• Mortgage for a 1099 Independent Contractor

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Common questions

What is a conventional loan?

A conforming mortgage that follows Fannie Mae or Freddie Mac guidelines. It is not government-backed (unlike FHA or VA). Conventional loans typically offer the lowest rates when the borrower's income, credit, and assets fit the agency box.

Can a self-employed borrower get a conventional loan?

Yes — if your income qualifies on two years of tax returns. The challenge for many business owners is that tax-return income is depressed by legitimate write-offs. If your documented income meets the DTI, conventional is typically the lowest-rate path.

How is self-employed income calculated for conventional loans?

Using Schedule C net income plus standard add-backs (depreciation, depletion, amortization), or K-1 distributions plus W-2 income from the same entity, averaged over two years. This math often produces a lower qualifying income than bank-statement programs.

What credit score do I need for a conventional loan?

Minimum 620 for most conventional programs, with the best pricing at 740+. Below 680, pricing adjustments (loan-level price adjustments, or LLPAs) increase the effective rate.

What is the maximum loan amount for a conventional loan?

Conforming loan limits set by FHFA for 2026: $766,550 for most areas, up to $1,149,825 in high-cost metros. Loans above these amounts are jumbo and follow different guidelines.

Do I need PMI on a conventional loan?

PMI is required if your down payment is less than 20%. Unlike FHA, PMI cancels automatically when your equity reaches 20% of the original appraised value. Lender-paid PMI options exist that roll the cost into the rate.

How does conventional compare to a bank statement loan?

Conventional offers lower rates and lower down payments when the file qualifies on tax-return income. Bank statement programs qualify on deposits — useful when write-offs depress tax-return income below what you actually earn.

What reserves are required for a conventional loan?

Typically 2 months PITIA for a primary residence; 6 months for investment properties. Investment property conventional loans also require that you own no more than 10 financed properties.