A conventional loan is amortgage loan that a homebuyer receives from a private non-government lender. Definition and Example of Conventional Loans Conventional loans are any type of mortgage loan that is not offered or insured by a government entity as part of a specific program.
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What is a conventional mortgage loan?
A conventional mortgage loan is one that鈥檚 not guaranteed or insured by the federal government. Most conventional mortgage loans, aka conventional mortgages, are 鈥渃onforming,鈥?which simply means that they meet the requirements to be sold to Fannie Mae or Freddie Mac.
Are conventional loans guaranteed by the government?
In short, a conventional loan is not guaranteed by the government. Instead, it鈥檚 available and guaranteed through the private sector. Conventional loans account for a large portion of purchases and refinances, and are available through different types of mortgage lenders, including banks, credit unions and online lenders.
What are non-conforming conventional loans?
One type of non-conforming conventional mortgage is a jumbo loan, which is a mortgage that exceeds conforming loan limits. Because there are several different sets of guidelines that fall under the umbrella of 鈥渃onventional loans,鈥?there鈥檚 no single set of requirements for borrowers.
Why are conventional loans so popular?
There鈥檚 a reason why conventional loans are so popular. This type of loan has several features that make it a great choice for most people: Because conventional loans offer so much flexibility, there are still some decisions you have to make even after you choose this loan type.