A conventional loan is a type of mortgage loan that is not insured or guaranteed by the government. Instead, the loan is backed by private lenders, and its insurance is usually paid by the borrower.

Conventional loans are much more common than government-backed financing. In the first quarter of 2018, conventional loans were used for 74% of all new home sales, making them the most popular home financing option—by a long shot.

Though conventional loans offer buyers more flexibility, they’re also riskier because they’re not insured by the federal government. This also means it can be harder for you to qualify for a conventional loan.

Benefits of Conventional Loans

Low down payment: While the down payment for a conventional loan may be a bit higher than for an FHA or VA loan, you can still manage to get in with as little as 3% in certain circumstances.

No Other Fees: With a conventional loan, you can put 20% down and not have to worry about additional fees added to your monthly payment or loan balance. FHA has the Up-front Mortgage Insurance and the monthly mortgage insurance and VA has the VA Funding fee.

Flexibility: Typically, you’ll find you have more flexibility on the types of loans available compared to an FHA or VA loan. Conventional loans have all types of Adjustable Rate programs (ARMs) that VA doesn’t have and FHA doesn’t have as much of.