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.
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.
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- FHA Loan
A mortgage insured by the Federal Housing Administration that allows low down payments and requires mortgage insurance premiums.
- VA Loan
A loan partly guaranteed by the U.S. Department of Veterans Affairs that can offer eligible borrowers no down payment and no monthly mortgage insurance.
- PMI (Private Mortgage Insurance)
Insurance often required on a conventional loan above 80 percent LTV, protecting the lender if the borrower defaults.
- Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the property value, used to size a loan and to decide whether PMI applies.
This 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.