A conventional home loan is a type of mortgage that is not guaranteed or insured by the federal government, in contrast to government-backed loans like FHA, VA, or USDA loans. Instead, they are available through private lenders like banks, credit unions, and mortgage companies. Here are some key characteristics and aspects of conventional home loans:

1. Down Payment: Conventional loans typically require a down payment, with many lenders asking for 5% to 20% of the home’s purchase price. However, there are some conventional loan programs available that allow for lower down payments.
2. Private Mortgage Insurance (PMI): If the down payment is less than 20%, borrowers will typically need to pay PMI, which protects the lender if the borrower defaults on the loan. Once a certain level of equity (usually 20%) is achieved, PMI can usually be removed.
3. Loan Limits: Conventional loans have limits on the amount you can borrow. These limits can vary based on the location of the property and other factors. Loans that are within these limits are known as “conforming” loans, while those above these limits are known as “non-conforming” or “jumbo” loans.
4. Interest Rates: The interest rates on conventional loans can be either fixed (where the rate remains constant over the life of the loan) or adjustable (where the rate can change at specified times).
5. Credit Requirements: Conventional loans typically have stricter credit requirements compared to some government-backed loans. A higher credit score often results in better interest rates and terms.
6. Variety of Terms: Borrowers can choose from a variety of loan terms, including popular options like 15-year, 20-year, or 30-year mortgages.
7. Flexibility: Conventional loans can be used for various property types, including primary residences, second homes, and investment properties.
8. Loan Processing: Some borrowers might find that the loan processing and underwriting for a conventional loan can be faster than for government-backed loans, though this can vary based on the lender and specific circumstances.
9. Equity Building: With conventional loans, especially those with higher down payments, borrowers can start building equity in their homes faster.