If a residential mortgage loan is not insured or guaranteed by the federal government, it is known as a conventional mortgage. The word “conventional” means normal – which indicates that it is a common/typical loan. The majority of Americans have a conventional mortgage. The number of government mortgages is much less.
Conventional mortgages include all different types and different term lengths as well, etc. Keep in mind that a conventional mortgage is not a conforming one. Conforming mortgages are conventional but not all conventional mortgages are conforming. If you are interested in the details and specifics as to why this is the way it is, give us a call and we would be happy to explain it to you further.
Since conventional loans are not governed by any one entity, especially the government, there is not a limit on the maximum amount the loan is. Any private entity can loan has much as they want. Private entities can also require as much of a down payment as they want and require whatever credit score they want us well. They do require a minimum credit score of 620, though. Most conventional loans usually require a bigger down payment than other loans, as well. Since the government doesn’t back them, though, they do offer more flexibility.
Most lenders do give you the ability to choose from a conventional or government loan. If you have average or above average credit, you will have your options in the kind of loan you qualify for.