Conventional Loan
A conventional loan is a mortgage loan that’s not backed by a government agency. Conventional loans are divided into two categories “conforming” and “non-conforming” loans. Conforming Loans meet the underwriting guidelines set by Fannie Mae and Freddie Mac.
Non-Conforming Loans
This program does not meet the loan amount set by the Federal Housing Finance Agency; currently, $510,400 for single-family homes in most areas or in some other way does not meet the guidelines set by Fannie Mae and Freddie Mac.
Conforming Loans
This program meets the conforming loan amount limits set by the Federal Housing Finance Agency. They also meet the published guidelines that govern the type of loan Fannie Mae and Freddie Mac will purchase from lenders. The guidelines dictate every aspect of the borrower’s creditworthiness, loan credentials, aka loan scenario, the property type, and the required documents for each loan transaction.
These parameters are set for natural persons defined as human beings, not business entities, and residential properties suitable for housing one to four families.