Conventional Fixed Rate Loan

Is there such a thing called conventional fixed rate loan?

2 Answers

Yes.  This term is referring to a fixed rate loan (where the rate is fixed for the entire length of the loan) that is being securitized through the conventional market, normally FNMA (fannie mae) or FHMC (freddie mac).  Loans referred to as "conventional" are usually below the threshold of $417,000.

Other types of loans are "government" loans, such as loans insured by the FHA (Federal Housing Administration), or VA loans (Veterans Administration).  Also the USDA has a "Rural loan", used as the name implies in more rural areas.

If a loan is over the $417,000, it is commonly referred to as a "jumbo" loan.  There are now "jumbo conventional" loans, where the loan is over $417,000, but under a county limit set by HUD (Housing and Urban Development).

The original poster did answer the question in pretty good detail.

Non conventional loans are normally considered Jumbo or high cost loans that will not be purchased by conforming investors. Examples of non conforming loans could be jumbo, super jumbo, hard money (private loans), high cost loans, and some commercial loans.

Most people are shooting for a conventional fixed rate loan however. These loans allow for greater security as opposed to adjustible rate loans which offer an introductory rate that will increase over time. Adjustible rate loans are often cited as one of the many reasons for our current financial crisis. This has led most people and even lenders to prefer to secure 30 year fixed loans. I have even seen some non conforming 30 year fixed products this years such as hard money 30 year fixed loans.