A conventional mortgage or conventional loan is
a homebuyer's loan that is not offered or secured by a government entity.
A conventional mortgage is a home loan that isn’t insured by a government agency. Rather, it is a completely private instrument, its terms and parameters set by the bank, credit union or whatever financial institution is offering it. Virtually every type of mortgage lender offers conventional loans, and they are ideal for borrowers with a strong credit profile, stable income and minimal debt.
Conventional loans can come with a fixed or adjustable rate, and they can be conforming, meaning they fall within the loan limits set by the Federal Housing Finance Agency (FHFA), or non-conforming in that they exceed these limits. In 2024, the conforming loan limit is $766,550 in most areas, and $1,149,825 in pricier markets.
Consumers have a number of types of home loans to choose from. Any borrower with solid credit, low debt and established income should consider a conventional loan. They are available to first-time and trade-up homebuyers, as well as those who are downsizing. Investors in single-family or multi-family dwellings might also consider conventional mortgages.
In contrast, borrowers with less-solid credit scores and ready cash might choose a mortgage backed by the Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA). These mortgages typically carry lower requirements around credit scores and down payments.
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Here's how the requirements for different types of home loans — conventional and various government-insured loans — stack up against each other.
Conventional loans are the most popular mortgage option, but even so, they’re not for everyone.
Some of the advantages and disadvantages:
* Typically larger down payment requirements
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