All mortgages can be divided into two main categories: conventional and government loans. Additionally, each of the various mortgage programs can be classified as fixed rate loans, adjustable rate loans, or a combination of the two. In this technical bulletin, we’ll discuss government and conventional loans, including conforming vs. non-conforming loans. Government vs. Conventional Loans About 20% of all home loans in the U.S. are insured or guaranteed by an agency of the federal government and are considered government loans. The remaining 80% of residential mortgages are referred to as conventional loans. GOVERNMENT LOANS FHA Loans: The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), was established in 1934 during the Depression in order to stimulate the U.S. housing market. The FHA administers various mortgage loan programs, although the FHA is not a money lender; instead it issues federal insurance against losses to...
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