Conventional Loan
A mortgage that is not insured or guaranteed by a government agency and may require PMI when the original LTV exceeds 80 percent.
Quick flashcard
What does Conventional Loan mean on the Texas real estate exam?
Answer: A mortgage that is not insured or guaranteed by a government agency and may require PMI when the original LTV exceeds 80 percent.
Read the explanation below, then return to the full flashcard deck and try it again from memory.
Conventional Loan definition
A conventional loan is any mortgage not insured by the FHA or guaranteed by the VA or USDA. It is made by private lenders. Borrowers with stronger credit and larger down payments often choose conventional financing.
Many conventional purchase loans require private mortgage insurance when the original loan-to-value ratio exceeds 80 percent. For a covered mortgage, federal law generally requires automatic termination on the date the balance is scheduled to reach 78 percent of the original value if the borrower is current.
Source basis
Definition checked against the official sources below on .
On the exam
Exam trap
Tested in
Financing & Settlement (7 of 80 National)
From definition to recall
See this term inside a real exam question.
Pass Texas gives you Texas-specific practice, diagnostics across the 14 exam areas, Trap Library, Math Coach, offline access, and one $59.99 purchase. No subscription. No copied exam questions.
Try 5 free questionsThis definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.