Mortgage & Home Loans

What is Conventional Loan?

A conventional loan is a mortgage from a private lender that's not backed by the government. They're split into conforming loans (which meet Fannie Mae and Freddie Mac guidelines) and non-conforming jumbo loans (which exceed the limits).

For 2026, the national conforming loan limit for a single-family home is $832,750.

Conventional loans typically require a credit score of 620+ and lower debt-to-income ratios than government-backed loans. You can put down as little as 3%, but anything under 20% means paying PMI. The upside: unlike FHA loans, conventional PMI drops off once your LTV hits 80%.

Quick Facts

Conforming Loan Limit (2026)$832,750 baseline for 1-unit properties

Major Purchasing EntitiesFannie Mae & Freddie Mac

Minimum Credit Score620+

Mortgage Insurance PolicyPMI required if down payment is under 20%

PRACTICAL EXAMPLE

You have a 740 credit score and buy an $800,000 home with 5% down ($40,000). You borrow $760,000. You'll pay monthly PMI until your principal drops to $640,000 — 80% of what the home was worth at purchase.

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RELATED TERMS

Learn More Key Concepts

MortgageA loan secured by real estate that you pay back in regular installments over a set term.

Down PaymentThe cash you pay upfront when buying a home, which becomes your initial equity in the property.

FHA LoanA government-backed mortgage insured by the Federal Housing Administration, designed for low-to-moderate-income borrowers.

PMIInsurance required on conventional loans when the down payment is less than 20%, protecting the lender against borrower default.

LTV RatioA lending risk assessment ratio calculated by dividing the outstanding loan balance by the property's appraised value.

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