← All Glossary Terms
Definition
A conventional loan is any residential mortgage not insured or guaranteed by a federal government agency (unlike FHA, VA, or USDA loans). Most conventional loans conform to Fannie Mae or Freddie Mac guidelines — the 2026 conforming loan limit is $766,550 in most counties, up to $1,149,825 in designated high-cost areas. Conventional loans typically require a 620+ credit score; the best interest rates start at 740+. Borrowers putting 20%+ down avoid PMI entirely. Those below 20% pay PMI until reaching 78% LTV, at which point lenders must automatically cancel it under the Homeowners Protection Act — a key advantage over FHA's permanent MIP.
Also Known As
conforming loan
non-government loan
Fannie/Freddie loan
conventional mortgage
Used in Context
- With a 760 credit score and 25% down payment on a $400,000 home, James qualified for the best conventional loan rate without PMI — saving roughly $150/month compared to an FHA loan.
- The conventional loan's $766,550 conforming limit meant that buyers in San Francisco above that threshold needed a jumbo loan at a higher rate.
- After accumulating 20% equity through home appreciation, Susan requested PMI cancellation on her conventional loan — saving $95/month immediately.
Ready to compare mortgage options?
Free quotes from licensed experts — no spam, no obligation, results in 60 seconds.
Get Free Quotes →