A Conventional Loan is simply a mortgage loan not insured by FHA or guaranteed by the VA or Farmers Home Administration.

Conventional loans may be "conforming" and "non-conforming". Conforming loans follow the terms and conditions set by Fannie Mae and Freddie Mac. These guidelines put the maximum price for a first mortgage at $417,000 for a single-family home. If the purchase is made outside of the 48 contiguous United States (in Guam, the Virgin Islands, Hawaii, or Alaska), or the home is for a two-family, three-family, or four-family configuration, larger values apply before the loan is no longer considered a conventional loan.

Non-conforming loans do not meet Fannie Mae or Freddie Mac qualifications, but that are still considered conventional.

Conventional loans can be fixed rate mortgages, adjustable rate mortgages, balloon mortgages, or hybrid loans. Almost any type of loan that you take, if not issued by a government entity, is considered a conventional loan.

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