Conventional Loan
A mortgage that is not insured or guaranteed by a government agency. PMI is required when the loan-to-value ratio is above 80 percent.
A conventional loan is any mortgage not insured by the FHA or guaranteed by the VA or USDA. It is made by private lenders. Borrowers with stronger credit and larger down payments often choose conventional financing.
When the loan-to-value ratio is above 80 percent, the lender requires private mortgage insurance, which terminates automatically at 78 percent of the original value.
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- FHA Loan
A mortgage insured by the Federal Housing Administration that allows low down payments and requires mortgage insurance premiums.
- VA Loan
A mortgage guaranteed by the U.S. Department of Veterans Affairs for eligible veterans, allowing no down payment and a funding fee instead of monthly mortgage insurance.
- PMI (Private Mortgage Insurance)
Insurance a conventional borrower pays when the loan-to-value ratio is above 80 percent, protecting the lender against default.
- Loan-to-Value Ratio (LTV)
The ratio of the loan amount to the property value, used to size a loan and to decide whether PMI applies.
This definition is Florida real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.