What Does Conventional Mortgage Mean?
A conventional mortgage is a type of mortgage loan that doesn't have any sort of backing or insurance provided by a government entity such as the Veterans Administration or the Federal Housing Administration. Many conventional mortgage loan holders purchase mortgage insurance to protect against losses from any potential defaults.
Insuranceopedia Explains Conventional Mortgage
Conventional mortgages are an alternative to mortgages for which government agencies provide financial backing. By financially backing mortgages, government agencies such as the Federal Housing Administration and the Veterans Administration act as an insurance measure against default.
Mortgages can represent a substantial amount of money, such as hundreds of thousands—or even millions—of dollars. This is why there is a variety of options when it comes to mortgages, with different types of insurance measures to prevent against default-related losses.