What is a conventional loan?

A conventional mortgage is a type of home loan that is not backed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, it is issued by a private lender and typically requires a down payment of at least 3% for certain programs such as Fannie 97, Home Possible, HomeReady (see related links below for more information). Borrowers must also have a good credit score and a stable income to qualify for a conventional mortgage. These loans tend to have lower interest rates than government-backed loans, but they also come with stricter lending requirements.

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