Conventional Mortgage

AAA

DEFINITION of 'Conventional Mortgage'

A type of mortgage in which the underlying terms and conditions meet the funding criteria of Fannie Mae and Freddie Mac. About 35-50% of mortgages, depending on market conditions and consumer trends, are conventional mortgages. In other words, Fannie Mae and Freddie Mac guarantee or purchase 35-50% of all mortgages. Conventional mortgages may be fixed-rate or adjustable-rate mortgages.

INVESTOPEDIA EXPLAINS 'Conventional Mortgage'

The secondary market for conventional mortgages is extremely large and liquid. Most conventional mortgages are packaged into pass-through mortgage-backed securities, which trade in a well-established forward market known as the mortgage TBA (to be announced) market. Many conventional pass-through securities are further securitized into collateralized mortgage obligations (CMOs).

RELATED TERMS
  1. Biweekly Mortgage

    A mortgage with principal and interest payments due every two ...
  2. Graduated Payment Mortgage

    A type of fixed-rate mortgage in which the payment increases ...
  3. Deed Of Release

    A legal document that removes a previous claim or lien on an ...
  4. Conforming Loan Limit

    The limit on the size of a mortgage which Fannie Mae and Freddie ...
  5. Owner Financing

    When a property buyer finances the purchase directly through ...
  6. Conforming Loan

    A mortgage that is equal to or less than the dollar amount established ...
Related Articles
  1. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  2. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  3. 10 Steps For First-Time Home Buyers
    Home & Auto

    10 Steps For First-Time Home Buyers

  4. How Bitcoin Casinos Work
    Investing Basics

    How Bitcoin Casinos Work

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center