Conventional Refinance
The conventional refinance is one of the main ways to refinance. Here is the plain-English rundown for 2026.
How it works
A conventional refinance isn't government-backed and follows Fannie Mae or Freddie Mac guidelines. It typically needs a 620+ score and works for rate-and-term or cash-out. Its big advantage: once you reach 80% LTV you can request PMI removal, and PMI auto-cancels at 78% LTV - eliminating the permanent insurance FHA loans often carry.
Key things to know
- Weigh the new rate and term against your current loan — a refinance resets the clock.
- Budget 2-5% of the balance in closing costs (or roll them in for a higher rate).
- Find your break-even: costs divided by monthly savings.
- Cash-out is capped at 80% LTV conventional/FHA; VA cash-out can reach 100%.
Program terms change. Join the free alerts to hear about updates to the conventional refinance first.
Be First to Know When Rates Fall
Join the free Refi Rate Guide alert list — we watch rates, cash-out rules, and new programs so you do not have to.
Frequently Asked Questions
- What is the conventional refinance?
- A conventional refinance isn't government-backed and follows Fannie Mae or Freddie Mac guidelines. It typically needs a 620+ score and works for rate-and-term or cash-out. Its big advantage: once you reach 80% LTV you can request PMI removal, and PMI auto-cancels at 78% LTV - eliminating the permanent insurance FHA loans often carry.
- What does it cost?
- Most refinances run 2-5% of the loan in closing costs. A no-closing-cost version trades those fees for a slightly higher rate.