Two terms homebuyers commonly mix up frequently when shopping for a mortgage are “conventional” loan and “conforming” loan. Many people say one when they mean the other, and assume there is no difference between them.

The mix-up is understandable. Both of these loan types start with a “c.” Plus, there is an overlap between them. But not all conventional loans are conforming loans. To make things clear, let’s lay out the definitions for both of these terms:

Difference of Conventional Loans vs. Conforming Loans

• Conventional loans are loans that are not backed by government agencies. This differentiates them from loan products like VA, USDA and FHA.

• Conforming loans are mortgages that fit the Fannie Mae and Freddie Mac conforming loan limits.

So, you can have a conventional loan that conforms to the loan limits, and is therefore also a conforming loan.

But it is also possible that you can have a conventional loan that does not conform to those loan limits. It is not backed by a government agency, so it is still a conventional mortgage, but it is also a non-conforming loan.

Another word you can use to describe a non-conforming conventional loan is a “jumbo” mortgage.

Some homebuyers think that jumbo loans are not conventional loans, but they are mistaken.

We hope that clears up the difference between conforming loans and conventional loans, and that you now understand that conventional loans can be conforming or non-conforming.

Get Answers to All of Your Mortgage Questions

At Grandview Lending, we know you probably have more questions about conventional loans, conforming loans, and jumbo loans. During your consultation, you can receive the detailed answers you are looking for.

To get started, please call us today at (317) 255-0062 and we look forward to helping you with your mortgage needs in Indianapolis and throughout the state of Indiana.