A conventional loan is any mortgage that is not insured or guaranteed by a government agency — no FHA, VA, or USDA backing. It is the default choice for most borrowers with solid credit and steady income, and it comes in two flavors: conforming (within Fannie Mae and Freddie Mac limits) and non-conforming, such as jumbo loans.
The trade-off versus government-backed loans is simple: conventional loans reward strong borrowers. Put 20% down and you skip mortgage insurance entirely. Even with less down, private mortgage insurance cancels once you build enough equity — unlike FHA's insurance, which can stick around for the life of the loan. Weaker credit, on the other hand, gets priced harshly on a conventional loan; FHA is often the better deal there.
Down payments can go as low as a few percent on some conventional programs, so 20% is a choice, not a requirement. For a side-by-side breakdown, see FHA vs. conventional.