A conventional mortgage or conventional loan is any type of home buyer’s loan that is not offered or secured by a government entity. Instead, conventional mortgages are available through private lenders, such as banks, credit unions, and mortgage companies. However, some conventional mortgages can be guaranteed by two government-sponsored enterprises; the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac)
- A conventional mortgage or conventional loan is a home buyer’s loan that is not offered or secured by a government entity.
- It is available through or guaranteed by a private lender or the two government-sponsored enterprises—Fannie Mae and Freddie Mac.
- Potential borrowers need to complete an official mortgage application, supply required documents, credit history, and current credit score.
- Conventional loan interest rates tend to be higher than those of government-backed mortgages, such as FHA loans
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 or not guaranteed by the federal government and as a result, typically have stricter lending requirements by banks and creditors.