What is a conventional loan?

A conventional loan is any type of home loan that isn’t insured or guaranteed through a government agency. Some quick facts: They often follow government-set rules: Many conventional loans conform to government-set loan limits as well as income and credit score minimums.

What is a conventional mortgage?

A conventional loan is the most popular type of mortgage in the United States. In fact, conventional loans accounted for roughly 80% of the home loans that closed in August 2021, according to Ellie Mae. Backed by private lenders rather than the federal government, conventional loans can be used to buy or refinance homes.

What are the different types of conventional loans?

A conventional loan falls into two different categories: conforming and non-conforming. Conforming loans are those that conform to lending standards set by Fannie Mae and Freddie Mac, meaning that Fannie or Freddie will purchase the loan from the lender, so the lender doesn’t have to wait 30 years to collect the full amount of the loan.