Conventional loans are mortgage loans that are not insured by a government agency. They are offered by lenders and financial institutions that are considered Government Sponsored Entities (GSE.) Conventional loans may have a higher credit score requirements and have stricter income and debt-to-income ratio requirements than government backed loans. However, they often have lower interest rates, making them a more cost-effective option for those who qualify. These loans are often underwritten with Fannie Mae or Freddie Mac guidelines, but can also be private money or portfolio type loans that a bank or mortgage institution funds but does not sell on the open market. If you have a good credit score and a solid financial history, a conventional loan may be a good choice for you.