Most mortgage loans come from one of the following sources: banks, mortgage companies, brokers, savings banks, or credit unions. They are called conventional loans if you do not have FHA insurance or a VA guarantee.
The expressions conforming and nonconforming are used to describe whether or not the loans follow guidelines set by Fannie Mae and Freddie Mac (more later on these two corporations.)
The largest single-family loan Fannie Mae will buy is $417,000, with some exceptions for particular geographic areas. The largest loan Freddie Mac will buy is $359,650. Anything larger cannot be bundled into the standard resale packages. This is important to you because you can generally receive cheaper interest rates if you qualify for a Fannie Mae or Freddie Mac resale of your loan.
If you are slightly over the top loan limits, you might want to pay a somewhat larger down payment in order to come within the requirements. Larger loans, often called jumbo loans, or nonconforming loans, are usually kept in the lender’s private portfolio or charged higher interest rates and sold to other types of investors. There is nothing derogatory about a nonconforming loan.
Generally you will not deal with mortgage brokers when shopping for a business loan to buy real estate. In other words, if you plan to buy and flip, or buy and turn the real estate into rental property, you should talk to local lenders, not mortgage brokers. Interest rates for business loans are usually higher than those for home loans.
The closing costs may be larger, and loan underwriting might take longer. Bear that in mind when making your plans.