What is a characteristic of a typical conventional loan?

A typical conventional loan is often associated with having a fixed interest rate, which is one of its defining characteristics. This stability allows borrowers to budget their payments effectively over the life of the loan since the interest rate remains the same, providing predictability in monthly mortgage payments. This feature is particularly appealing to buyers who want to avoid fluctuations in their payment amounts that can occur with adjustable-rate mortgages.

In contrast, while some loans may require a lower down payment, conventional loans can necessitate a higher down payment compared to other loan types. Additionally, conventional loans are not insured by the government, which distinguishes them from government-backed loans such as FHA or VA loans. Finally, conventional loans are not exclusively reserved for first-time buyers; they are available to all qualified purchasers, including those who are buying a second home or an investment property.