When ever someone realizes I know about home loans, I get asked the same questions over and over - 'What is a conventional home loan?', 'What's the difference?' 'What is a conventional home loan good for? Is it better?'. Clearly, the government isn't doing enough to try to educate its masses on what loans are!

If you, too, are asking 'What is a conventional home loan', then you've come to the right place.

So, What is a Conventional Home Loan?

Loans can get complicated, so don't fret if you don't understand the answer to your question yet - you won't have to ask 'what is a conventional home loan' again, just be patient with yourself.

Basically, a conventional home loan is any sort of loan or lender agreement that's not backed fully by the VA (Veterans Administration), or fully protected by the FHA (The Federal Housing Administration). But that's about where the basics end!

If you're still wondering on the specifics on your question - what is a conventional home loan - don't worry. I'm not done explaining it quite yet!

There are several different types of conventional home loans, as the term is fairly broad, and covers quite a bit.

There the;
Fixed Rate Conventional Home Loan

The fixed rate conventional home loan is the most common, which is where the borrower - being you! - will have the same, locked interest rate for the entire duration of the loan.

This means that the borrower will pay the principle, which is what you borrowed, and the interest, the same each and every month until it's paid off. Your interest rate never changes.

Still asking 'what is a conventional home loan', or just haven't answered your questions? There's more!

Another conventional home loan type is;
The Conforming Home Loan

This is where the borrower, and the lender, both agree to comply with the rules set out by a federally run organization - Fannie Mae or Freddie Mac. These loans aren't approved, or denied, by either organization - they're simply there.

It benefits the lender most of all to have this, because the lender can then sell your loan - yes, I said sell! - to one or the other, and receive the funds that you would normally pay them faster.

There's also the;
Jumbo Home Loans

Jumbo home loans are simple - these are loans that are so large, they fall out of the 'purchase limits' set by Fannie Mae or Freddie Mac. They normally have higher interest rates, and come from a private investor.

Overall…

We hope that this article has helped you get a basic understanding - no more asking 'What is a conventional home loan'? for you!

What is a Conventional Home Loan? The most stable and basic of loans, they're actually quite good! Head to Low Income Home Loan and find out if you qualify for one now, safely and securely. It's painless, isn't it?