A conventional loan is a private mortgage that adheres to the standards set by the Federal Housing Finance Agency (FHFA) and is eligible for purchase by Freddie Mac and Fannie Mae. These loans are favored for their competitive interest rates available to borrowers with strong credit histories. Conventional loans provide a broad array of options, making them a popular choice among homebuyers who meet specific eligibility criteria, including credit score and debt-to-income ratio requirements. Additionally, these loans are characterized by their flexible terms, such as fixed and adjustable-rate structures, and the possibility to finance up to 97% of the home's purchase price.