|The conventional loan is typically made by institutional lenders such as savings and loans and banks. This type of loan may also be made through pension funds or credit unions and it does not involve government participation in the form of insuring (like FHA) or guaranteeing (such as VA) the loan.
Typically, a conventional loan is based on an 80% loan to value ratio. That is, the lenderís first choice is to lend on 80% of the purchase price, which requires the buyer to make a 20% down payment. Conventional lenders may also offer 90% or 95% loans.