Conventional Loans
Mortgages not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac.
Conventional loans are the workhorse of the mortgage market. They aren't backed by the FHA, VA, or USDA, but they conform to underwriting guidelines published by Fannie Mae and Freddie Mac, which buy them from originating lenders.
Conventional underwriting rewards strong credit, steady documented income, and meaningful down payments. Borrowers with 20% down avoid mortgage insurance entirely; lower down payments are available (as little as 3% on some programs) with private mortgage insurance until equity reaches 20%.
For buyers who qualify, conventional financing is usually the cheapest path over the life of the loan, no upfront funding fee, no permanent mortgage insurance, and the ability to drop PMI without refinancing.
Related terms
Other terms you'll see alongside Conventional Loans
A conventional loan whose amount falls within the limit eligible to be purchased by Fannie Mae or Freddie Mac.
A government-insured mortgage program designed to help buyers with lower credit scores or smaller down payments qualify.
An insurance policy that protects the lender if a borrower defaults on a conventional loan with less than 20% down.
The Federal National Mortgage Association, a government-sponsored enterprise that buys conventional loans from lenders.
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