What’s A Conventional Loan?

March 11, 2017

“Conventional” just means that the loan is not part of a specific government program. Conventional loans typically cost less than FHA loans but can be more difficult to get.There are two main categories of conventional loans:Conforming loans have maximum loan amounts that are set by the government. Other rules for conforming loans are set by Fannie Mae or Freddie Mac, companies that provide backing for conforming loans.Non-conforming loans are less standardized. Eligibility, pricing, and features can vary widely by lender, so it’s particularly important to shop around and compare several offers.

CONVENTIONAL – CONFORMING

  • Most common loan type.
  • Loan amount of $484,350 or less.
  • Loan amount applies only to single-family homes.
  • A down payment of less than 20% will typically require mortgage insurance.

CONVENTIONAL – CONFORMING JUMBO

  • Loan amount between $484,351 and $726,524.
  • Loan amount applies only to single-family homes.
  • Rates are slightly higher than a conforming loan.
  • Only available in certain high-cost counties.

CONVENTIONAL – NON-CONFORMING JUMBO

  • Loan amount over $726,525.
  • Rates are slightly higher than a conforming jumbo.
  • Loan amount applies only to single-family homes.
  • Usually need good credit and a high down payment to qualify.

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