Conventional Mortgage Loans

conventional mortgages confuse puppy

Conventional mortgages are the traditional kind of loans, the kind that existed before the Government created any loan program to help people who could not qualify for a mortgage.

They come in two flavors: conforming and non conforming.

Conforming Mortgages

The conforming ones fit the guidelines of Fannie Mae and Freddie Mac, two quasi-governmental institutions.

Since they are not backed by a governmental agency, they place a lot of risk on the lenders. Therefore, lenders reserve them for people with good credit scores and no income / employment issues for 1-4 unit properties that are either primary residences, second homes or investments.

Non-Conforming Mortgages

They are all the other non-government backed loans secured by a 1-4 unit property. They are riskier than the conventional conforming ones. The risk can be due to the property (non-warrantable condos), loan amount (jumbos) or the borrower (credit issues, inability / unwillingness to fully document income / employment, like bank-statement qualifying loans).