How is a conventional mortgage defined?

A conventional mortgage is defined as a loan that is not insured or guaranteed by a federal agency, such as the FHA, VA, or USDA. This type of mortgage typically involves lending by private lenders and adheres to the guidelines set by Fannie Mae and Freddie Mac, which govern the criteria for conventional loans.

Being in first position generally means that the loan takes priority over other liens on the property. This is a common characteristic of a conventional mortgage, emphasizing that these loans are often the primary source of financing secured by the property itself. Since conventional loans operate outside the federal insurance systems, they can have different qualification standards and requirements, which do not include federal backing.

In contrast, loans insured by federal agencies do not meet the definition of conventional mortgages, thus differentiating the two categories.