What are the typical features of a conventional mortgage?

Conventional mortgages are defined by their lack of government backing and the options available for interest rates. They can have either fixed or adjustable interest rates, which gives borrowers the flexibility to choose a plan that best fits their financial situation.

One key feature is that a conventional mortgage typically requires private mortgage insurance (PMI) if the down payment is less than 20%. This insurance protects the lender in case the borrower defaults on the loan, making conventional mortgages a riskier proposition for lenders when the down payment is low. The absence of government backing distinguishes conventional loans from other mortgage types like FHA or VA loans, which do have government support.

In contrast, mortgage options that are described with government backing, such as those with adjustable interest rates or no requirement for PMI, do not accurately depict conventional mortgages. Similarly, options that suggest high interest rates and no down payment fail to align with the standard characteristics of conventional loans. These factors combined clearly illustrate why the selection regarding fixed or adjustable rates, lack of government backing, and the PMI requirement under specific conditions represents the true essence of a conventional mortgage.