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Tetra Home Loans Grosse Pointe · Est. 2023
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Conventional Home Loans · Certified Financial Planner

Conventional home loans in Grosse Pointe.

The default mortgage for most qualified Pointes buyers. Fixed and adjustable-rate options with 3% to 20% down, backed by a CFP who runs the math before running the application.

Schedule a 15-Minute Intro Call → Start My Pre-Qualification

Conventional is the default for most qualified Pointes buyers. The question is whether it's the default for you.

I'm David Rakecky, CFP®. A conventional mortgage is not backed by the federal government, which means fewer restrictions, no upfront mortgage insurance premiums, and the ability to drop PMI once you reach 20% equity. For most buyers with solid credit and a down payment, that combination wins on lifetime cost. For some buyers, it doesn't. My job is to help you figure out which one you are before we pick a loan, not after.

By The Numbers
3%
Min Down, First-Time Buyers
620+
Minimum Credit Score
$832,750
2026 Conforming Limit (Wayne County)
15 or 30 yr
Most Common Loan Terms
Structure

Fixed-rate or adjustable-rate?

For most buyers, fixed-rate is the right default. An adjustable-rate mortgage can save real money in specific situations, but betting on that timing when you don't have to is how people get hurt.

Default Recommendation

Fixed-Rate Conventional

  • Interest rate locked for the life of the loan
  • Predictable monthly payment that never changes
  • Available in 10, 15, 20, 25, and 30-year terms
  • Best for buyers staying in the home long-term
  • Protection against future rate increases
  • What I recommend for most Pointes buyers
Situational

Adjustable-Rate (ARM)

  • Lower initial rate for 5, 7, or 10 years
  • Rate adjusts annually after the fixed period
  • Rate caps limit per-adjustment and lifetime increases
  • Can save thousands during the fixed period
  • Fits buyers confident they'll sell or refinance before the rate adjusts
  • Not the right default, but legitimately useful in specific cases
Requirements

Conventional loan guidelines.

General qualifying criteria. As a broker, I shop across lenders who sometimes offer flexibility on specific boxes.

Credit Score

Minimum 620 for most programs. Scores of 740+ unlock the best rates and lowest PMI. I review your credit upfront and flag specific improvements when they'd move you into a better tier.

Down Payment

As low as 3% for first-time homebuyers (Conventional 97) or income-qualified buyers through HomeReady and Home Possible. Repeat buyers who don't qualify for those programs typically need 5% minimum. 20% eliminates PMI.

Debt-to-Income Ratio

Most conventional programs cap total DTI at 50%, with stronger rates typically available under 45%. Higher DTI is sometimes possible with compensating factors like strong reserves or a higher credit score.

Employment History

Two years of work history is standard, and it can include school, training, or employment (not required to be in the same field). Self-employed buyers need two years of tax returns or an alternative-doc program.

Cash Reserves

Primary residence purchases typically don't require reserves. Investment properties and some second homes do. Strong reserves can also offset other qualifying issues like a tighter DTI or lower credit score.

Appraisal

A conventional appraisal confirms the home's market value. Grosse Pointe's older housing stock and unique architectural styles occasionally create appraisal friction. I know the local appraiser set and how to prepare for it.

Private Mortgage Insurance

Three ways to handle PMI.

When your down payment is under 20%, conventional loans require private mortgage insurance to protect the lender. PMI adds to your monthly payment, but unlike FHA mortgage insurance, it isn't permanent on most files. Conventional PMI can be removed once you reach 20% equity through payments or appreciation, which is one of the biggest long-term advantages of going conventional.

Three paths to think about, depending on your situation:

Path 1

Put 20% down

No PMI. The simplest path. Requires more cash at closing, but eliminates the monthly cost entirely from day one.

Path 2

Pay monthly PMI

Standard approach for under-20%-down buyers. Cancels once you reach 20% equity (automatic drop at 22%). Usually the right move if you expect appreciation or plan to pay down principal.

Path 3

Lender-paid PMI

Lender absorbs the PMI cost in exchange for a slightly higher rate. No separate PMI payment, but the higher rate lasts for the life of the loan unless you refinance.

Comparison

Conventional vs. FHA vs. VA.

Quick comparison of the three main loan types. I help you figure out which one actually fits during your intro call.

Conventional

Min Down3% / 5%
Min Credit620
MI RemovableYes, at 20%
Upfront FeeNone
Best ForQualified buyers
3% down applies to first-time buyers and income-qualified programs. Standard minimum is 5%.

FHA

Min Down3.5%
Min Credit580
MI RemovableOften no
Upfront Fee1.75% UFMIP
Best ForLower credit, low down
On files with under 10% down, MIP stays for the life of the loan. Files with 10%+ down can drop MIP after 11 years.

VA

Min Down0%
Min CreditVaries by lender
MI RemovableNo PMI ever
Upfront FeeFunding fee*
Best ForEligible veterans
*Funding fee waived for veterans receiving VA disability, surviving spouses of eligible veterans, and Purple Heart recipients on active duty.
FAQ

Common questions.

What is a conventional home loan?

A conventional home loan is a mortgage that is not insured or guaranteed by the federal government. It is originated and funded by private lenders and typically conforms to guidelines set by Fannie Mae and Freddie Mac. Conventional loans are the most common mortgage type in the United States and the default choice for most qualified Pointes buyers.

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

Conventional loans are available with as little as 3% down for first-time homebuyers or through income-qualified programs like HomeReady and Home Possible. Repeat buyers who don't qualify for a low-down-payment program typically need 5% minimum. Putting 20% down eliminates PMI entirely.

What credit score do I need for a conventional mortgage?

Most conventional programs require a minimum credit score of 620. The best rates and lowest PMI typically become available at 740 and above. Your credit score also directly affects your PMI rate if you're putting less than 20% down, which makes credit optimization one of the highest-leverage things to address before applying.

Should I choose a fixed-rate or adjustable-rate mortgage?

For most buyers, a fixed-rate mortgage is the right default. It locks your interest rate for the life of the loan and gives you predictable payments. An adjustable-rate mortgage starts with a lower rate that adjusts after an initial 5, 7, or 10 year period. An ARM can save real money if you're confident you'll sell or refinance before the rate adjusts, but betting on that timeline when you don't have to is how people get hurt.

What is PMI and how can I avoid it?

Private mortgage insurance (PMI) is required on conventional loans when your down payment is under 20%. It protects the lender, not you. Three ways to handle it: put 20% down and skip it entirely, pay monthly PMI and cancel it once you reach 20% equity (automatic drop at 22%), or use lender-paid PMI which rolls the cost into a slightly higher interest rate for the life of the loan.

What is the 2026 conforming loan limit in Grosse Pointe?

The 2026 conforming loan limit for a single-family home in Wayne County, which includes all five Grosse Pointe communities, is $832,750. Loans up to this amount qualify for conventional conforming terms. Loans above this amount require jumbo financing, which has different qualification standards.

How does conventional compare to FHA or VA?

Conventional loans typically require higher credit scores and larger down payments than FHA, but they often cost less over the life of the loan because they don't carry upfront funding fees or the lifetime mortgage insurance that FHA requires on most files. VA loans are only available to eligible service members, veterans, and surviving spouses, but when available they usually beat both conventional and FHA on cost. The right answer depends on your specific situation, which is what I help you work through.

Is conventional the right fit for your purchase?

Start with a 15-minute intro call. We'll talk through your credit, your down payment, and your goals. By the end, you'll know whether conventional is the right tool or whether something else fits better. No documents, no credit pull, no pressure.

Schedule a 15-Minute Intro Call → Start Your Pre-Qualification

Or call 313-380-4740

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