A Conventional loan is a non-government loan that meets requirements set by the Federal Housing Finance Agency (FHFA) and meets the funding criteria of Freddie Mac and Fannie Mae. The upside of choosing a conventional loan is they offer low-interest rates to borrowers with excellent credit scores.

With a conventional loan, homebuyers typically enjoy the largest selection of loan options at the most competitive rates. They are geared towards homebuyers who have credit scores of 620 or higher (although a score that's above 740 will help you get the best rate,) and a qualifying debt-to-income ratio. If you have good credit, you could possibly have the option of having a down payment of as little as 3%! That’s even less than an FHA loan!

If your down payment is lower than 20%, with a conventional loan, you will be required to pay private mortgage insurance (PMI). The upside is that on a conventional loan once you reach 78-80% loan to value you can stop paying the PMI. You do not have to pay it for the life of the loan! On a Conventional Loan, the PMI amount is based on the borrower’s credit score and loan to value, it is not a standard amount. A benefit for those with great credit! There is also the option to pay a one-time upfront premium and not have to have PMI in your monthly payments.

Though 30-year fixed-rate conventional mortgages are the most common, you can find other terms like 15 or 20-year loans as well as adjustable interest rates. If you have a higher credit score and can make a down payment of 3% or more, then this may be your best option for a mortgage loan!