Definition: A conventional loan is a mortgage that is not insured or guaranteed under a government loan program, such as FHA, VA, or USDA.
Example
A private lender makes a mortgage that has no FHA insurance or VA or USDA guarantee. It is a conventional loan, even if private mortgage insurance is required.
Keep the distinction clear
Conventional does not mean conforming. A conventional loan may be conforming or nonconforming; those categories concern requirements such as loan limits and underwriting standards.
Related terms
Private Mortgage Insurance (PMI) · Federal Housing Administration (FHA) · Department of Veterans Affairs (VA)
Keep studying
Loan-to-Value, Down Payments, Equity, and PMI
References: CFPB: Conventional loans
Pronunciation (US): kuhn-VEN-shuh-nuhl LOHN (capitals show stress)
Pronunciation reference: Merriam-Webster
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