A mortgage loan not insured by any government program, conventional loans are the most common type of mortgage. They differ from FHA loans and VA loans which are insured by the government. Conforming conventional loans follow the loan amount guidelines set by Fannie Mae and Freddie Mac. Nonconforming loans don’t meet those qualifications, but are also considered conventional. Each mortgage lender, bank or mortgage broker will offer different rates, terms and fees for conventional loans, so it’s best to get Good Faith Estimates from a number of different places to find the best loan.
Fixed Rate Mortgage
A fixed rate mortgage is a mortgage that has a static interest rate for the entire life of the loan, and offers a straight forward, consistent monthly payment.
Adjustable-Rate Mortgage (ARM)
An Adjustable -Rate Mortgage, commonly referred to as an “ARM”, is a mortgage loan with an interest rate that changes usually based on an index.