Conventional Loan
A mortgage not insured by the federal government, following guidelines set by Fannie Mae and Freddie Mac. Requires a minimum credit score of 620. Offers better interest rates than FHA for borrowers with good credit, and private mortgage insurance (PMI) can be removed once you reach 20% equity.
Related guides
- Full credit & FICO® glossary
Browse all defined terms by category.
- Mortgage
A loan used to purchase or refinance real estate, where the property serves as collateral. Mortgages are installment loans with terms typically ranging from 10 to 30 years. Missing mortgage payments can lead to foreclosure. Minimum credit scores vary by loan type (FHA: 500, conventional: 620).
- FHA Loan
A mortgage insured by the Federal Housing Administration (FHA), allowing borrowers with credit scores as low as 580 to qualify with a 3.5% down payment (or 500 with 10% down). FHA loans require mortgage insurance premiums (MIP). Popular with first-time homebuyers.
Frequently Asked Questions About Conventional Loan
What does Conventional Loan mean?
A mortgage not insured by the federal government, following guidelines set by Fannie Mae and Freddie Mac. Requires a minimum credit score of 620. Offers better interest rates than FHA for borrowers with good credit, and private mortgage insurance (PMI) can be removed once you reach 20% equity.
Is Conventional Loan important for my FICO® score?
Understanding Conventional Loan helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.