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A conventional mortgage is a fully amortizing mortgage. The conventional mortgage can have either a fixed or a variable rate. The term conventional mortgage also implies that the loan is not insured by a government agency, such as the FHA or VA. Such loans are called FHA loans and VA loans, respectively. The terms conventional mortgage and conforming loan are often confused. A conforming loan is a mortgage that adheres to the guidelines of Fannie Mae. A conventional mortgage can be a conforming loan, or not. An example of a conventional mortgage that is non-conforming is the jumbo loan. A thirty-year amortizing fixed-rate mortgage for $3 million is a conventional mortgage, but such a conventional mortgage would be called a jumbo loan rather than a conforming loan. Such a conventional mortgage does not conform to the upper limit on loan amount set by Fannie Mae. |
