A Quick Guide to All You Need to Know About Conventional Loans

In the United States, a conventional loan is a mortgage loan that conforms to GSE (Fannie Mae and Freddie Mac) guidelines. The most well-known guideline is the size of the loan, which as of 2013 was generally limited to $417,000 for single family homes in the continental US. Other guidelines include borrower’s loan-to-value ratio (i.e. the size of down payment), debt-to-income ratio, credit score and history, documentation requirements, etc. In general, any loan which does not meet guidelines is a non-conforming loan. A loan which does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan. The following article explains how these loans apply to you.