Amy Asks… Im confused with some of the loan terminology. What exactly is a “Conventional” Loan?

A conventional loan is a lender agreement that is not guaranteed or insured by the federal government under the Veterans Administration (VA), the Federal Housing Administration (FHA), or the Rural Housing Service (RHS) of the U.S. Department of Agriculture.

A conventional loan can, however, follow the guidelines of government sponsored enterprises (GSE’s) like Fannie Mae or Freddie Mac. Both Fannie Mae and Freddie Mac are stockholder-owned corporations and are not part of the federal government.

Conventional loans may be conforming and non-conforming. Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac – Loan amounts less than $417,000. Nonconforming loans do not meet Fannie Mae or Freddie Mac qualifications, but are also considered conventional – loan amounts over $417,000.

The important part of the above definition is that they are “not guaranteed or insured” , so sometimes they are a higher risk for the lender- which is why a lender might require mortgage insurance if you have less than 20% down payment or equity. Higher credit scores and more restrictive conditions might apply to this type of qualification as well.

Financing a home can be a stressful time. ALMC will make the entire process hassle free. We obtain loan approval in one day, keep you informed throughout the transaction and will attend your closing. Make ALMC Mortgage your first choice! Find The Right Loan For You

Meet Cheryl!

About Cheryl

As a successful business owner and community leader, Cheryl Braunschweiger is known and respected for getting things done with a degree of skill and enthusiasm that bring out the best in those around her - colleagues, clients and friends. The name of her business, ALMC Mortgage, reflects Cheryl's philosophy and personality. She says it stands for All Loans Must Close –a reflection of her determination to do whatever it takes to serve her clients. Cheryl has been in the mortgage lending business for 20 years. Read More About Cheryl
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