A mortgage that isn't backed by the government. Most conventional loans follow Fannie Mae and Freddie Mac guidelines (called "conforming"). Typical down payments are 3-20%.
"Conventional" just means the loan isn't insured or guaranteed by a government agency (FHA, VA, USDA). It's the most common type of mortgage in the U.S., usually originated by banks or mortgage companies and sold to Fannie Mae or Freddie Mac on the secondary market.
Down payments range from 3% to 20%, depending on the program. With less than 20% down, you'll pay private mortgage insurance (PMI) — but unlike FHA MIP, PMI drops off automatically once you reach 20% equity. Credit score requirements are usually 620 minimum, with the best rates at 740+.
Conventional loans give you the most flexibility long-term: easier to drop mortgage insurance, more refinance options, and no government-program restrictions on how you can use the home.
Example
A buyer with a 740 credit score and $40,000 saved could buy a $400,000 home with 10% down ($40,000) on a conventional loan. They'd pay PMI of about $135/month until reaching 20% equity, then it drops off.
Also known as
conventional mortgage, non-government loan