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You’ve probably heard the term “conventional loan” thrown around—but what exactly does it mean, and how does it compare to other types of mortgages?
🏦 What Is a Conventional Loan?
A conventional loan is a mortgage that is not backed by a government agency like the FHA, VA, or USDA. These loans are often underwritten to standards set by Fannie Mae and Freddie Mac.
✅ Common Features
- Typically requires a higher credit score than government loans
- Minimum down payment as low as 3% (for qualifying buyers)
- PMI required if you put less than 20% down
- Often lower overall cost for borrowers with strong credit
🆚 How It Compares to Government Loans
| Loan Type | Backed By | Ideal For | Down Payment |
|---|---|---|---|
| Conventional | Private lenders | Buyers with solid credit and savings | As low as 3% |
| FHA | Federal Housing Admin. | First-time or lower credit buyers | 3.5% |
| VA | Dept. of Veterans Affairs | Eligible veterans/military | 0% |
| USDA | U.S. Dept. of Agriculture | Rural/low-income buyers | 0% |
🧠 How to Choose
The best loan depends on your credit, down payment, location, and financial goals. A lender can walk you through your options and help you choose the loan that fits you best.
