A conventional mortgage is a type of loan that is not insured or guaranteed by the government. Instead, conventional loans which have had less than a 20% down payment are insured by private mortgage insurance companies. Loans where the at least 20% down has been put down are not subject to mortgage insurance requirements.
Conventional mortgages typically require a higher credit score and are more stringent on debt-to-income rations than their government backed loan counter-parts like FHA or VA loans.
Conventional loans adhere to underwriting guidelines set by Fannie Mae or Freddie Mac, which are two government-sponsored enterprises that buy and guarantee mortgagees in the secondary market.
