{"id":19537,"date":"2026-04-20T04:19:02","date_gmt":"2026-04-20T11:19:02","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=19537"},"modified":"2026-04-20T21:46:28","modified_gmt":"2026-04-21T04:46:28","slug":"buyer-what-is-a-conventional-loan","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-what-is-a-conventional-loan\/","title":{"rendered":"What is a Conventional Loan? Here\u2019s What Buyers Need To Know"},"content":{"rendered":"

You\u2019ve picked out the home, and imagined every little decorating detail. You\u2019ve worked hard to improve your <\/span>credit score<\/span><\/a>, pay down your debts, and save up for a healthy <\/span>down payment<\/span><\/a>. Finally, you\u2019re ready to buy that dream home and tackle this whole <\/span>mortgage<\/span><\/a> thing once and for all.<\/span><\/p>\n

Except suddenly, you\u2019re met with confusing terminology: \u201cconventional,\u201d \u201cconforming,\u201d \u201cnon-conforming,\u201d and \u201cgovernment-backed.\u201d What does any of that even mean? It\u2019s all so overwhelming that you just wish someone would come over to your home, brew you a hot cup of tea, and walk you through it all step-by-step.<\/p>\n\n\n\n\n\n

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That\u2019s where we come in \u2014 though sadly, you\u2019ll have to brew your own tea. We talked to loan underwriting expert Jessica\u00a0<\/a>Sanchez\u00a0<\/a>to<\/span>\u00a0walk through the ins and outs of conventional loans. Here\u2019s what you need to know.<\/p>\n

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What\u2019s a conventional loan?<\/h2>\n

A conventional loan is a private mortgage that\u2019s not backed by the federal government (we\u2019ll get to government loans in a bit).<\/p>\n

Most homebuyers get a conventional loan. In fact, according to recent data, <\/span>74% of recent buyers financed their home purchase, and <\/span>52% of financed buyers use conventional loans<\/span><\/a>.<\/span><\/p>\n

All buyers who want to use a conventional loan will have to meet certain credit, debt, and savings requirements, as defined by the specific lender.<\/p>\n

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The different types of conventional loans<\/h2>\n

There are two main types of conventional loans: conforming and non-conforming. <\/span>Here\u2019s how each type of conventional loan works.<\/span><\/p>\n

Conforming loans<\/h3>\n

Conforming loans are mortgages that conform to financing standards set by the federal government, and can therefore be purchased by Fannie Mae and Freddie Mac. Most buyers use conforming loans.<\/span><\/p>\n

Who sets the requirements for conforming loans (and what are they)?<\/h3>\n

Fannie and Freddie are government-sponsored entities (GSE) that back most of the mortgages in the U.S. Here\u2019s how it works.<\/p>\n

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  1. Fannie and Freddie set requirements that all buyers have to meet to get a conforming loan.<\/li>\n<\/ol>\n

    These requirements include:<\/p>\n