How are "Conventional Loans" defined?

Conventional loans are defined as mortgages that are not backed or insured by a government entity. This means they are offered and secured through private lenders without any government guarantees, unlike government-backed loans such as FHA, VA, or USDA loans. Because conventional loans are not insured by the government, they are typically subject to stricter credit requirements and down payment guidelines than other loan types.

The nature of conventional loans allows them to offer various types of terms, including adjustable-rate mortgages and fixed-rate options, which adds to their flexibility. This distinction is central to understanding how they function in the broader landscape of mortgage options and why they can appeal to borrowers seeking private financing solutions.