A conventional loan is a mortgage that isn't insured or guaranteed by a government agency such as FHA, VA, or USDA. Most conventional loans are underwritten to guidelines from Fannie Mae or Freddie Mac and are commonly called conforming when they fall within the FHFA loan-limit and eligibility rules.
Who this may fit
Conventional loans often fit buyers with steady income and a range of down-payment options. Because they aren't tied to a single government program, they offer flexibility in property type, occupancy, and mortgage-insurance structure.
Key decision factors
- Down payment (often 3% to 20%+ depending on program and borrower situation)
- Credit profile and history
- Debt-to-income ratio and reserves
- Property type and occupancy
- Whether the loan is conforming, high-balance, or jumbo
Illustrative example
Common mistakes
- Assuming a conventional loan always requires 20% down
- Confusing conforming loan limits with credit limits
- Ignoring the total cost of PMI when comparing to lower-down options
Questions to ask a licensed loan officer
- Which conventional program are you quoting me and why?
- How does my LTV affect pricing and PMI structure?
- What automated underwriting findings are you relying on?
Sources
We link to primary sources for every substantive claim. Publication dates below are marked as unverified until confirmed under our Source Policy.
- Conforming Loan Limit ValuesFederal Housing Finance Agency (FHFA) · Published/effective: 2026 limits announced 2025-11-25; effective 2026-01-01 · Last checked: 2026-07-28
Related guides and calculators
- Conventional Loan Requirements
The common conventional loan qualification factors: credit, DTI, down payment, reserves, and property type.
- Conventional Loan Down Payment
How down payment affects PMI, monthly payment, cash to close, and long-term outcomes on a conventional loan.
- Private Mortgage Insurance (PMI)
How PMI works on a conventional loan, how it may be removed, and what factors influence the cost.
- Conventional Loan Limits
How conforming loan limits work, why they change, and how county limits affect your options.
- Conventional vs FHA Loan
A neutral comparison of conventional and FHA loans across down payment, mortgage insurance, credit, and long-term cost.
- Methodology
Source hierarchy, update cadence, calculator formulas, review standards, correction workflow, and the boundary between education and a mortgage offer.