# Conventional loan

> A conventional loan is a mortgage with no FHA, VA or USDA insurance or guarantee. What that means for your down payment, PMI and loan limits.

URL: https://mortgage-math-us.com/glossary/conventional-loan/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A conventional loan** is a mortgage that isn’t insured or guaranteed by a federal agency such as FHA, VA or USDA. Most conventional loans follow Fannie Mae or Freddie Mac rules so they can be sold to them; larger ones are jumbo loans kept by lenders or sold to private investors.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Minimum down payment (some programs) | 3% | [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) | Oct 28, 2026 |
| Fannie Mae maximum LTV, one-unit home purchase | 97% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 |
| Ask to cancel PMI at (share of original value) | 80% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |
| PMI ends automatically at | 78% | [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) | Oct 28, 2026 |

## Conventional vs government-backed

With no federal backstop, the lender or the investor that buys the loan carries the default risk, so price and approval lean heavily on your credit score, debt-to-income ratio and down payment. Some programs accept as little as 3% down, but with less than 20% down you’ll typically pay [private mortgage insurance](https://mortgage-math-us.com/glossary/private-mortgage-insurance/). Unlike FHA mortgage insurance, PMI can be dropped: you can ask your servicer to cancel it at 80% of the original value, and it ends automatically at 78%.

## Example: when PMI stops

Buy a $350,000 home with 5% down and you borrow $332,500. At 7.24% over 30 years, principal and interest is $2,266 a month. PMI ends automatically once the scheduled balance reaches $273,000 — during year 13 if you make only the regular payments. The [conventional loans guide](https://mortgage-math-us.com/loan-types/conventional-loans/) covers credit and DTI rules.

## Related terms

- [Conforming loan](https://mortgage-math-us.com/glossary/conforming-loan/) and [jumbo loan](https://mortgage-math-us.com/glossary/jumbo-loan/)
- [FHA loan](https://mortgage-math-us.com/glossary/fha-loan/), the main government-backed alternative
- [HomeReady](https://mortgage-math-us.com/glossary/homeready/), a low-down-payment conventional program

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/) — PMI ends automatically at this share of original value; Ask your servicer to cancel PMI at this share of original value (Oct 28, 2026)
- [CFPB](https://www.consumerfinance.gov/owning-a-home/prepare/figure-out-how-much-you-want-to-spend/) — Minimum down payment on some conventional loans (Oct 28, 2026)
- [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae maximum LTV, one-unit principal residence purchase (Apr 1, 2026)
- [CFPB: Conventional loans](https://www.consumerfinance.gov/owning-a-home/conventional-loans/)

_General information, not financial advice._