A conventional loan is basically any kind of lender agreement that's not backed in full by the Veterans Administration or protected by the FHA (the Federal Housing Administration). AS LOW AS 3% DOWN PAYMENT 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.(1)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. But stay tuned; we’ll get to that later.