What is a Conventional Loan?
Definition of a conventional loan
A conventional loan, the most common type of home mortgage loan, is not insured or guaranteed by any government program. With non-conventional loans, statute sets interest rates. With a conventional loan, however, rates, terms, and fees are set by the bank, mortgage broker, or mortgage lender. Conventional loans may be either conforming (following Fannie Mae and Freddie Mac guidelines) or non-conforming.
Buyers should shop for good faith estimates from a number of lenders in order to take advantage of the best loan.