What is a Conventional Loan?
A conventional mortgage or loan is any type of home buyer’s loan that is not offered or secured by a government. These are available through private lenders, such as banks, credit unions, and mortgage companies.
Conventional mortgages typically have a fixed rate of interest, which means the interest rate does not change throughout the life of the loan. Because of this, they are not guaranteed by the federal government and have stricter lending requirements by banks and creditors.
Contact us today to learn more about conventional loans, including the requirements and documentation you’ll need to apply for them.
Note: There are two types of Conventional Loans, conforming and non-conforming (also known as Jumbo loans).
A conventional mortgage conforms to:
- Loan limits
- Down payment requirements
- Borrower income requirements
- Debt-to-income ratios
- Other underwriting guidelines established by Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mae purchase mortgages that meet these limits, thereby creating additional funding lenders can use to make new mortgage.