LOAN TYPES

WHAT IS A CONVENTIONAL LOAN?

Understanding Conventional Mortgages and Loans

Conventional mortgages typically have a fixed rate of interest, which means that the interest rate does not change throughout the life of the loan. Conventional mortgages or loans are not guaranteed by the federal government and as a result, typically have stricter lending requirements by banks and creditors.
  1. A conventional mortgage or conventional loan is a home buyer’s loan that is not offered or secured by a government entity.

  2. It is available through or guaranteed by a private lender or the two government-sponsored enterprises—Fannie Mae and Freddie Mac.

  3. Potential borrowers need to complete an official mortgage application, supply required documents, credit history, and current credit score.

  4. Conventional loan interest rates tend to be higher than those of government-backed mortgages, such as FHA loans.

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