Conventional Loan

A conventional loan is any mortgage that is not insured or guaranteed by a federal agency — unlike an FHA loan or VA loan. It is by far the most common mortgage type in the United States.

Most conventional loans are conforming: they meet the standards of Fannie Mae and Freddie Mac, including the annual loan-size limit, so those agencies can buy them from lenders. Loans above the limit are jumbo loans, which follow their own rules.

Typical requirements are a credit score of about 620 or higher and a down payment as low as 3% for qualified buyers, though putting down less than 20% means paying PMI until you reach roughly 20% home equity. Unlike FHA mortgage insurance, conventional PMI is removable — one reason borrowers with strong credit usually come out ahead with a conventional loan.

For a side-by-side comparison of the main loan types, see the guide Conventional vs FHA vs VA loans.

Related terms: FHA Loan, VA Loan, Jumbo Loan, Private Mortgage Insurance (PMI).