What Is a Conventional Home Loan?

Regular loans are loans that are not explicitly guaranteed by the federal government. This type of loan establishes a commercial relationship between the borrower and the lender, but the loan is not optimal for the loan provider. For example, when the interest rate rises, it can only obtain a return lower than the market rate. The emergence of the secondary market in the 1930s solved this problem. A regular loan may be unsecured when it is initiated, but if it is added to an asset pool to support mortgage-backed securities, it may meet the criteria for obtaining a guarantee. ^[1]