What is a conventional loan and how does it differ from government-backed loans?

A conventional loan is a mortgage not insured or guaranteed by a government agency. It is originated and funded by private lenders like banks and credit unions and follows guidelines set by Fannie Mae and Freddie Mac for conforming loans. Government-backed loans include Federal Housing Administration, or FHA, loans insured by HUD, Veterans Affairs, or VA, loans guaranteed by the VA, and United States Department of Agriculture, or USDA, loans for rural areas.