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What Are Conventional Loans?

what are conventional loans

by Don Rafner

Most home buyers get their mortgage money from conventional mortgage loans.

Private Entities

Conventional mortgage loans are simply loans made by private entities such as banks, credit unions, private lenders or thrifts. Loans made by the federally regulated home lenders Fannie Mae and Freddie Mac are also considered to be conventional. Loans insured by either the Federal Housing Administration or the U.S. Department of Veterans Affairs are the two most popular non-conventional mortgage loans.

Conforming Loans

Conventional mortgage loans come in two basic types, conforming and non-conforming. Lenders consider conventional loans conforming when they are made out for about $417,000 or less for single-family homes. This figure is known as the conforming loan limit. It's important to note, though, that in

many high-cost areas of the country, the conforming loan limit stands at $729,750. This includes the San Francisco area.

Non-Conforming Loans

Interest Rates, Terms

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