A conventional loan is a mortgage loan that is not backed or insured by any government agency. These loans conform to guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises that buy mortgages from lenders and sell them to investors. Conventional loans typically require higher credit scores and larger down payments than government-insured loans such as FHA and VA loans. They also have a maximum loan amount limit that varies depending on the borrower's location and the type of property being financed. Interest rates on conventional loans can be fixed or adjustable, and the loan terms can range from 10 to 30 years.
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