A conventional mortgage loan is a home financing option that is not backed by any government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, these loans are offered by private lenders, including banks, credit unions, and mortgage companies.
Conventional loans often conform to guidelines set by Fannie Mae and Freddie Mac, which include limits on loan amounts and borrower qualifications.
Borrowers typically need a good credit score, a stable income, and a down payment—usually ranging from 3% to 20% of the home's purchase price—to qualify. Conventional loans are available as fixed-rate or adjustable-rate mortgages and are known for offering competitive interest rates, fewer fees, and flexibility for buyers with strong financial profiles. However, they usually have stricter requirements compared to government-backed loans, making them better suited for borrowers with solid credit histories and financial stability.