A conventional loan is a type of mortgage loan that is not secured by a government entity, such as through the Federal Housing Administration (FHA) or other departments, but instead is typically offered by private lenders. Its qualification standards usually require excellent credit scores and/or a large down payment relative to other loan types. One advantage of this type of loan is access to low-interest rates due to the flexibility in how it can be customized to an individual’s needs. Conventional loans can also offer lower closing costs and fees compared with other types of loans, making them an attractive option for potential homeowners.

If you are looking to purchase a large item such as a house or car, you might consider a conventional loan. This loan is not secured by any government entity but is made by either a private bank or credit union. Unlike other loans, the interest rate for a conventional loan often varies according to your credit score, so those with higher credit scores may end up paying less and having more resources available. Because these loans do not always require collateral, it’s important to review your loan agreement carefully and be sure that it meets your needs and budget.