A conventional loan is typically any loan that is not insured by a government agency such as the Dept of Housing and Urban Development (HUD), the Veterans Administration (VA) or the USDA. Conventional loans are typically offered by banks, credit unions, and private mortgage companies. A special type of conventional loan is a “conforming” loan which is “pooled” together with other conventional loans and sold on the secondary market to the government-sponsored enterprises, Freddie Mac and Fannie Mae. Conforming loans offer consumers competitive interest rates with or without private mortgage insurance. Conforming loans have loan limits that are adjusted annually and comprise about 2/3rds of the mortgages originated in the U.S.
