Conventional Loans-Conforming and Non-Conforming

What Is A Conventional Loan? 

The term “Conventional” in this case refers to the fact that conventional loans are not backed or insured by any government entity. Government entities that do back mortgage loans include the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the US Department of Agriculture.  We can help you with your conventional loan requirements.

Conforming Conventional Loans are typically purchased by the 2 main Government Subsidized Entities (GSE’s), Fannie Mae and Freddie Mac.

If a loan does not conform to guidelines of the 2 GSE’s, it can be purchased by a Credit Untion, bank, or other private financier. A conventional loan is typically fixed in it’s rate and term.

What does “conforming loan” mean? Conventional Loans - Freddie Mac - Pivot Lending GroupConventional Loans-Fannie Mae-Pivot Lending Group

Conforming simply means that a loan conforms to the current guidelines set forth by Fannie Mae and Freddie Mac. A loan can be considered conventional if it is conforming OR non-conforming.

Examples of non- conforming Conventional Loans include:

  • Jumbo loans
  • Portfolio loans
  • Sub-prime loans
  • Some Adjustable Rate Mortgages (ARM’s)
  • Land/Lot Loans

In summary, conforming and non-conforming conventional loans can be used to purchase a home or refinance and existing loan.

The best way to use the various home mortgage financing products and loans available will depend on your credit score, the amount of down payment or equity available for the transaction, the loan amount and the property type.

Your Mortgage Loan Originator will advise you on the best options to accomplish your goals while providing your with many home mortgage loan options.

 

1st Mortgage is now Pivot Lending Group