Let’s be honest—the word “mortgage” is intimidating. Adding the word “conventional” just makes it confusing. What exactly is a conventional mortgage? Aren’t all mortgages the same? Allow me to shed some light.
There are different types of mortgages.
Everyone has a unique financial situation. As a result, a mortgage loan can be put together in a variety of ways. The four main loan types that determine a loan structure are as follows:
- FHA (Federal Housing Administration)
- USDA (United States Department of Agriculture)
- VA (Veterans Affairs)
How is “Conventional” different?
Most conventional loans are subsidized or backed by the governing entities Fannie Mae or Freddie Mac. Unlike the other three mortgage types, which label the entity backing them in their name, conventional loans are categorized by any loan backed by Fannie or Freddie.