There are two categories of home loans: government-backed loans and conventional mortgages.

Government-backed loans are insured or subsidized by the federal government to protect lenders if a customer defaults on their payments.
Examples of government-backed loans include:

• Federal Housing Administration (FHA)
• Veterans Affairs (VA)
• U.S. Department of Agriculture Rural Development (USDA)

Conventional mortgages are not insured or subsidized by the government. Instead, these are home loan programs set up by Fannie Mae and Freddie Mac*.
Examples of conventional mortgages include:

• Adjustable-rate loans which have an interest rate that can change at intervals spelled out in the contract. This can make the monthly payment increase or decrease.
• Fixed-rate loans have a specified interest rate and basic payment for the life of the loan.

*Fannie Mae is also known as the Federal National Mortgage Associations (FNMA). Freddie Mac is also known as the Federal Home Loan Mortgage Corporation (FHLMC). The purpose of these organizations are:

• To allow lenders to reinvest their assets into more lending by expanding the secondary mortgage market.
• To increase the number of lenders in the mortgage market and encourage them to offer lower interest rate home loans.

Visit our Home Loans page to learn more.