Conventional loans are less a unified loan program, and more a catch-all for similar loans that are regulated by the US government, but not insured by a government entity.

Conventional loans usually have less stringent underwriting requirements than government-backed loans, but as a consequence, their rates tend to be slightly higher than those of government-backed loans, and their requirements as to the qualifications of individual buyers tend to be a bit more strict.

Conventional loans exist because banks and other financial institutions want to write their on particular style of loan, but want to ensure that it can be sold on the secondary market. To do this, they ensure that the loans are written within the bounds of federal regulations, however, by not binding these loans to any of the government-backed programs (FHA, USDA, VA), the individual lenders can have more control over how their loans are written.

For example, conventional loans usually require 5% down, but some lenders offer programs to reduce this to 3% or even 1% for qualified buyers. Conventional loans also require a minimum FICO score of 620, though certain lenders may require higher scores to qualify with them.

From a DTI perspective, most conventional lenders want to keep the total back end DTI at or under 50%, but some may allow that number to creep a little higher.

The maximum amount of seller concessions with conventional loans also depends upon how much of a down payment is being made on the loan and whether the property will be a primary or secondary residence, or an investment property.

Usually, conventional loans are used over the other basic loan programs for one of two reasons:

1. The property is damaged in such a way that it would not pass an appraisal for a government-backed loan.
2. The borrower is coming to the table with a considerable down payment to eliminate the need for mortgage insurance.