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Posted onJanuary 26, 2012 - 8:22 pm by Admin | 0 Comments

A conventional loan is the most common form of mortgage in the U.S market. Conventional mortgages get it's name from the fact that they are not insured by any government agency as opposed to FHA loans and VA which are guaranteed by HUD and Veterans’ Administration respectively.

Most of the conventional loans in the U.S are Fixed Rate Mortgages where the interest rate is fixed for the entire term of the loan(generally thirty years). There are also Adjustable Rate Mortgages where the interest rate fluctuates on par with a predefined index. See the Federal Reserve Board site for more information on ARMs and FRMs.

Most conventional loans, also called traditional loans, are packaged into mortgage-backed securities and sold in to secondary market. Since Fannie Mae and Freddie Mac control about ninety percent of the nation's secondary mortgage market, the terms and conditions of the traditional loans should meet the funding criteria set by Fannie Mae and Freddie Mac.


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