The term "conventional" refers to a loan that complies with the criteria set forth by Fannie Mae or Freddie Mac. Government-sponsored companies Fannie Mae and Freddie Mac buy mortgages from lenders and offer them to investors. As a result, lenders have more money to place more suitable purchasers in homes.
Jumbo loans, which are mortgages that are larger than the conforming loan restrictions, are one kind of typical non-conforming mortgage. A loan amount above the conforming county loan limit may be considered a jumbo loan if the county is not considered a 'high-cost' county.
There is no uniform set of standards for borrowers because "traditional loans" cover a variety of distinct sets of regulations. However, in general, the credit standards for conventional loans are more stringent than those for government-backed loans like FHA.
It’s possible for first time home-buyers to get a conventional mortgage with a down payment as low as 3% (97% loan-to-value). However, the down payment requirement can vary based on your personal situation and the type of loan or property. Loan-to-value (LTV) is how much your loan (expressed as a percentage) IS compared to the property value. So, 95% LTV means your loan will be 95% of the value of your property, meaning you'll be putting 5% down in addition to closing costs. Property value is based on the LESSER of said property's purchase price or appraisal value: