A conventional loan is a type of loan, and a fixed loan is a loan product. Think of it this way, a dog is a kind of animal. A collie is a specific type of dog.
A conventional loan typically refers to a "conforming loan". This would mean a loan that is underwritten to Fannie Mae or Freddie Mac guidelines. There are certain guidelines and characteristics that make it a conventional loan. Typically the borrower can show income and assets that are enough to qualify for the loan, a conventional borrower also would typically have very good credit. Essentially the borrower has to measure up to the guidelines of Fannie Mae and Freddie Mac to obtain a conventional loan.
A fixed loan is a loan in which the interest rate is fixed for the entire length of the loan. The term of the loan itself can vary from 10 to 30 years, in most 5 year increments, however the interest rate will remain the same throughout the entire life of the loan.
A fixed loan, or fixed rate mortgage can fall under the Fannie Mae or Freddie Mac umbrella, or it may be a jumbo loan, or a non-conventional or subprime loan. Opposing a fixed rate loan would be an adjustable rate loan, these products vary widely as well, and can just as easily be a conventional adjustable rate loan as any other type of loan.
In the end, a conventional loan is a group of loan products that meet specific qualifying criteria. A fixed rate loan is just one example of a loan product.
Answer Submitted on Fri, Dec 12 2008
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