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Conventional loans are actually any type of creditor agreement that are not financed by the Veterans Administration (VA), or supported by the Federal Housing Administration (FHA). In general, all conventional loans are protected by the government sponsored entities such as Fannie Mae (FNMA) and Freddie Mac (FHLMC).
There are different types of conventional loans that have their own peculiarities. Conforming and nonconforming types of conventional loans are the most common kind of subdivision. Conforming loans have to meet the guidelines set by Fannie May and Freddie Mac. One key feature is that the loan amount can not exceed the maximum loan limit set by Fannie and Freddie.
A VA loan is a mortgage loan guaranteed by the Veterans Administration. It was created in 1944 and signed into law by President Franklin D. Roosevelt. A VA loan provides veterans and/or their surviving spouses with a federally guaranteed home with zero down payment. The program, also referred to as the GI Bill, has been highly successful and has helped millions of American veterans and their families acquire a home.
The Federal Housing Administration was created in 1934 as an effort to bolster homes sales during the Depression. By financially guaranteeing loans the FHA lifts much of the risk of non-payment and foreclosure from private lenders. It is important to remember that the FHA is not a lender; they just guarantee your loan.