Conventional Home Loans
A conventional loan is a great alternative for non-veterans and veterans who do not qualify for a VA loan.
A conventional loan is any loan other than a VA or FHA home loan. These loans are not insured or guaranteed by the federal government. Conventional loans offer a multitude of different mortgage loan programs and expanded underwriting guidelines. More expanded guideline programs means more chances that a borrower may qualify for a home loan!
Conventional loan programs fall into 3 categories: Conforming loans, Non-conforming loans and Jumbo loans. Conforming loans are those that meet the approval guidelines of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. These entities, also known as Fannie Mae and Freddie Mac, are the largest purchasers of home loans in the nation. Fannie Mae and Freddie Mac set the basic eligibility models for which conforming loans must meet in order to be approved.
Non-conforming conventional loans are those that do not meet the general guidelines of Fannie Mae or Freddie Mac. They allow for people who do not fit the conforming guideline model to be able to become homeowners. Non-conforming home loans have expanded underwriting guidelines which typically relate to credit, employment, income and property type issues. The mortgage interest rate for non-conforming loans is generally higher than conforming loan mortgage rates.
A Jumbo Loan is any conventional loan over $359,650. The jumbo home loan typically follows conforming loan guidelines and the rate is generally higher.