A conventional mortgage loan is a type of home financing not backed by government agencies, typically offered by private lenders such as banks, credit unions, and mortgage companies, with stricter credit requirements but more flexibility in terms and loan amounts compared to government-insured options.

Key Features

• Credit score requirement: Generally a minimum of 620

• Down payment: As low as 3% for fixed-rate loans, though 5% for adjustable-rate mortgages

• Loan limits: $806,500 for conforming loans in most areas, with higher limits in expensive markets

• Private Mortgage Insurance (PMI): Required for down payments less than 20%

Types of Conventional Loans

• Conforming loans: Adhere to guidelines set by Fannie Mae and Freddie Mac

• Non-conforming loans: Include jumbo loans that exceed conforming loan limits

• Fixed-rate loans: Interest rates remain constant throughout the loan term

• Adjustable-rate mortgages (ARMs): Interest rates can change over time

Conventional loans often offer competitive interest rates and can be an attractive option for borrowers with strong credit profiles and stable financial situations.