Conventional Loan A mortgage not backed by a government agency — the most common home loan type

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 $832,750 in most counties, up to $1,249,125 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.