Conventional loans
“Conventional” just means that the loan is not part of a specific government program. Conventional loans typically cost less than FHA loans but can be more difficult to get.
There are two main categories of conventional loans:
Conforming loans
Conforming loans have maximum loan amounts that are set by the government. Other rules for conforming loans are set by Fannie Mae or Freddie Mac, companies that provide backing for conforming loans.
Non-conforming loans
Non-conforming loans are less standardized. Eligibility, pricing, and features can vary widely by lender, so it’s particularly important to shop around and compare several offers.
Mortgage insurance is required for some conventional loans. More on mortgage insurance.
Conforming |
|
---|---|
Conventional (conforming) |
$424,100 or less
|
Conforming jumbo |
$424,100 to county limit
|
Non-conforming |
|
---|---|
Jumbo (non-conforming) |
Up to $1-2 million
|
Non-conforming (other) |
|
Many of the loans that got people in trouble during the crisis fell in the “non-conforming (other)” category.
If you are considering a non-conforming loan, consult with multiple lenders. Ask if you could qualify for a conforming or FHA loan instead. Never make a final decision about which loan to take before getting your official Loan Estimates.