Definition: In conventional mortgages, part of each month's payment goes towards paying off the principal and part goes toward interest. Conventional mortgages include fixed rate mortgages, in which the interest rate is the same throughout the life of the loan, or adjustable rate mortgages, in which the interest rate can vary.
Also Known As: adjustable rate loans, variable rate loans, fixed rate loans
Examples:
Since conventional mortgages pay against principal, they have higher monthly payments than do interest-only loans.
