Home option
Conventional mortgage
A conventional mortgage is a home loan that is not insured by a federal government program.
What this page covers
This explainer is designed to show what the option is, how the basic mechanics work, and which details people commonly compare before looking at providers, products, or tools.
- Plain-English steps for how conventional mortgage works.
- A simple example that shows the moving parts without selecting a product.
- Comparison factors, calculators, and source links for deeper research.
How it works
1
A lender reviews credit, income, assets, debts, and the property.
2
The borrower selects a loan amount, rate type, and repayment term.
3
If the down payment is below certain thresholds, private mortgage insurance may apply.
4
The borrower repays principal and interest over the loan term, plus any escrowed taxes or insurance.
Simple example
A buyer looks at a $350,000 home with a 10% down payment.
Purchase price$350,000
Down payment$35,000
Loan amount$315,000
Items to estimateRate, fees, PMI, taxes
This example excludes closing costs, insurance, taxes, maintenance, and other ownership costs.