A conventional loan is a type of mortgage loan that is not insured or guaranteed by a government agency, such as the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). Instead, it is backed by private lenders and follows the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises. They offer a variety of terms, including fixed-rate and adjustable-rate options, and are commonly used for purchasing or refinancing residential properties. Conventional loans often have more stringent underwriting requirements and may require private mortgage insurance (PMI) if the down payment is less than 20%.