Conventional conforming loans are not made by a government entity, like FHA and VA loans, but instead, follow the guidelines set forth by Fannie Mae and Freddie Mac. These established guidelines usually call for a minimum credit score, certain income requirements, and a minimum down payment.
It is a myth that you need 20 percent down payment for a conventional loan. There are conventional loan programs that require as little as 3 percent down. Private mortgage insurance, or PMI, is required for any conventional loan with less than a 20% down payment. PMI is an insurance policy that protects the lender against loss resulting from default on a mortgage loan.