Do you know the difference between conventional and government loans?
The term “conventional loan” just refers to any loan that isn’t guaranteed or insured by a government agency. They fall into two categories:
Conforming mortgages are conventional loans that offer a lower rate in exchange for conforming to certain maximum limits and guidelines.
Non-conforming mortgages have a higher interest rate, since they’re for amounts above the conforming loan limits.
Government loans are from private lenders just like conventional loans are — but these loans are guaranteed by a government agency, allowing those lenders to relax their requirements.
FHA loans are insured by the FHA. These loans are great for first-time home buyers and low-income borrowers.
VA loans are government loans too, but these are guaranteed by the U.S. Dept. of Veterans’ Affairs. For veterans and service personnel who are eligible, these can be easier to qualify for than other loans.
USDA loans are government loans guaranteed by the U.S. Dept. of Agriculture. These loans are specifically for rural properties.
Still not sure which type of loan is best for you? Reply to this email or give us a call — we’d love to chat with you about the ins and outs of conventional and government loans.
This information was provided by one of our preferred vendors, Supreme Lending. Thank you, Cale Iorg, Senior Loan Officer NMLS# 1121662, for this information.