Conventional Mortgages—This is the type of loan that is not backed by the federal government.
The ones who can avail of this kind of loan are the borrowers with good credit, stable employment, and income histories, and the ability to make a 3% down payment can usually qualify for a conventional loan backed by
Fannie Mae or Freddie Mac, two government-sponsored enterprises that buy and sell most conventional mortgages in the United States. To avoid needing private mortgage insurance (PMI), borrowers generally need to make a 20% down payment.
While 20% down payment has become the norm for this kind of mortgage, some lenders are offering conventional loans with low down payment requirements and no private mortgage insurance.
After learning about conventional mortgages, it’s time to know more about jumbo mortgages on the next page.