What is a conventional loan?

A conventional loan is a mortgage not insured or guaranteed by a federal government agency — unlike FHA, VA, or USDA loans. Conventional loans follow guidelines set by Fannie Mae and Freddie Mac (conforming) or are held by the lender in portfolio (non-conforming). They typically require a minimum 620 credit score, 3%–20% down payment, and DTI below 43–50%. With 20% down, you avoid PMI entirely. Conventional loans offer more flexibility in property types and loan structures than government-backed loans, and can be used for primary residences, second homes, and investment properties.