Conventional loans are types of mortgages that are not backed by government agencies but rather backed by private mortgage lenders like banks, credit unions and other financial institutions. There are two types of conventional loans: conforming & non-conforming.
Conforming loans are conventional loans that follow the standards of the Federal Housing Finance Agency (FHFA), including credit, debt and loan size parameters.
Non-conforming loans are conventional loans that do not follow the FHFA guidelines. Non-conforming loans, instead, cater to those looking to purchase more expensive homes or those with unique credit profiles.
There are many benefits to conventional loans, depending on your financial situation. However, that also means there are some downsides. Once you take a deeper look at the pros and cons of conventional loans, you may be able to get a better idea if it is the right fit as you plan to buy a home.
If you're interested in learning more about conventional loans, let's have a conversation. And if you're ready to take the next step in applying for a conventional loan, apply today!