Conventional loan is any Loan secured by a Mortgage or Deed of trust that is not insured or guaranteed by an agency of the federal government (such as FHA or VA). There are several categories of conventional loans. Fixed rate mortgages are most common. A home Borrower “locks in” at an Interest rate, and the borrower pays down the Principal and interest on the mortgage every month at that rate.

Conventional loans meet stipulations set forth by Fannie Mae and or Freddie Mac, two very large mortgage trading companies. While Fannie Mea and Freddie Mac don't actually approve or disapprove of loans, they buy and sell mortgages. Lenders enjoy signing borrowers up with Conforming Loan, since they can later sell these loans to Fannie Mea or Freddie Mac to get funds for other investments.

Nonconforming loans that don't meet Fannie Mae or Freddie Mac qualifications are also considered conventional. Another type of loans, jumbo loans, falls outside of Fannie Mae eligibility and their loan amounts are over$417,000.Current Fannie Mae guidelines for conventional homes put the maximum price for a conventional, conforming loan at just over $417,000 for a single-family arrangement. If you live outside of the 48 contiguous United States (in Guam, Hawaii, or Alaska), you may qualify for a larger loan limit.