What’s the difference between a conventional loan and a government backed loan?

Conventional loans are offered by banks and other private lenders with no guarantee from the government that they’ll be paid back. Government-backed loans are also offered by banks and other private lenders, but the government guarantees they’ll re-pay the loan if the borrower doesn’t. There are three types of government-backed mortgages: FHA loans are guaranteed by the Federal Housing Administration to make homebuying more affordable, especially for first-time homebuyers. FHA loans have lower interest rates and lower credit score and downpayment requirements than conventional loans. VA loans are guaranteed by the Department of Veterans Affairs to help active-duty service members and veterans buy a home. VA loans have lower interest rates and credit score requirements than conventional loans. There’s no down-payment or private mortgage insurance (PMI) requirement. USDA loans are guaranteed by the US Department of Agriculture to stimulate development in rural areas. USDA loans have lower interest rates and credit score requirements than conventional loans and no down-payment requirement.

What’s the difference between a conventional loan and a government backed loan?

Conventional loans are offered by banks and other private lenders with no guarantee from the government that they’ll be paid back. Government-backed loans are also offered by banks and other private lenders, but the government guarantees they’ll re-pay the loan if the borrower doesn’t. There are three types of government-backed mortgages: <ul> <li>FHA loans are guaranteed by the Federal Housing Administration to make homebuying more affordable, especially for first-time homebuyers. FHA loans have lower interest rates and lower credit score and downpayment requirements than conventional loans.</li> <li>VA loans are guaranteed by the Department of Veterans Affairs to help active-duty service members and veterans buy a home. VA loans have lower interest rates and credit score requirements than conventional loans. There’s no down-payment or private mortgage insurance (PMI) requirement.</li> <li><a href="https://www.ucbi.com/business-banking/industry-specialized/usda" style="color:#0563c1; text-decoration:underline">USDA</a> loans are guaranteed by the US Department of Agriculture to stimulate development in rural areas. USDA loans have lower interest rates and credit score requirements than conventional loans and no down-payment requirement.</li> </ul>

Who do I contact if I have questions about my personal loan?

Stop by one of our <a href="/locations/" target="_blank">locations near you</a> to speak with a loan officer or use our <a href="/personal-banking/mortgage/#contact" target="_self">locator tool to find a mortgage loan officer</a>. If you'd like to speak with one of our customer support representatives, please call us at 1-800-UCBANK1 (1-800-822-2651).

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Downsize, add a bedroom or two, switch neighborhoods, or buy your dream home by the lake with our wide variety of home loan options. Our team of expert mortgage lenders will work with you to find the best home loan options for your current situation and long-term financial goals. Call 1-800-914-8224 to connect with a local lender and get started today.

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Your Next Home

Need a few more bedrooms? Looking to downsize or change neighborhoods? Our fixed and adjustable rate mortgages come in varying term lengths and can be personalized to fit your next dream.

Vacation Home

A vacation home is considered a second home, a property you purchase in addition to your primary home and plan to live in for parts of the year. For this type of home purchase, the main difference you can expect is a larger down payment requirement.

Investment Property

If you’re buying a house to flip it or to rent it out to others, you probably fall in the investment category. Unlike a second home, this could be more than one unit. It can also be rented out in short-term increments (think Airbnb) or for a longer term. Just like the vacation home, financing for these properties will require a larger down payment than a primary home would.

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Specific Loan Options

Conventional Loans

Conventional loans offer more options when it comes to home financing. They’re available through private lenders, and aren’t backed by the government (like FHA, VA, and USDA loans are).

Homestyle® Renovation

This renovation option offers a more cost-effective way to renovate your home with low downpayment options, savings, and flexible sources of funds.

USDA: Rural Housing Loan

Through the USDA Guaranteed Rural Housing Loan Program, low and moderate income individuals can qualify for a fixed-rate mortgage with minimal out-of-pocket expense, and often without a downpayment. Property must be in an eligibel rural area.

Jumbo Loans

We offer higher-than-conventional loan limit options for those dreaming BIG. Whether you are buying, refinancing or finally adding that movie theater room, we have the fixed-rate and ARM options to fit your unique needs.

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VA Mortgage Loan

You have served us, so let us to support you. For all past and present military members, and surviving spouses who are looking for help with buying a new home, we can assist you with a VA Mortgage Loan. Take advantage of potentially no down payments or mortgage insurance, low fixed rates and various repayment options.

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Physician Mortgage

For licensed physicians and doctors, we’ve designed a unique lending program just for you. Special rates are available for licensed physicians, fellows, interns, residents and dentists. This program is available for purchases or refinances with no down payment options, are ARM programs and do not require any private mortgage insurance.

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Frequently Asked Questions

You can change, but you’ll need to refinance through a new loan, which will come with closing costs and appraisal fees. Work with your mortgage lender to fully understand the math of what you’ll be spending and what you’ll be saving.

Conventional loans are offered by banks and other private lenders with no guarantee from the government that they’ll be paid back. Government-backed loans are also offered by banks and other private lenders, but the government guarantees they’ll re-pay the loan if the borrower doesn’t.

There are three types of government-backed mortgages:

FHA loans are guaranteed by the Federal Housing Administration to make homebuying more affordable, especially for first-time homebuyers. FHA loans have lower interest rates and lower credit score and downpayment requirements than conventional loans.
VA loans are guaranteed by the Department of Veterans Affairs to help active-duty service members and veterans buy a home. VA loans have lower interest rates and credit score requirements than conventional loans. There’s no down-payment or private mortgage insurance (PMI) requirement.
USDA loans are guaranteed by the US Department of Agriculture to stimulate development in rural areas. USDA loans have lower interest rates and credit score requirements than conventional loans and no down-payment requirement.

The interest rate on a fixed-rate mortgage stays the same throughout the life of the loan. With a fixed-rate mortgage, you don’t have to worry about your rate going up and causing a bigger monthly payment than you’ve planned on.

The interest rate on an adjustable-rate mortgage (ARM) can chane over time. Usually, the rate is lower than the market rate for the fixed-rate period of the loan typically seven to ten years, and then it’s adjusted on a set schedule based on the current market rate.

The schedule will be in your loan terms. Adjustments may be madeevery six months. Some ARMs come with a cap on how much interest you’ll be expected to pay so you have an idea of how high your payment may rise.

Stop by one of our locations near you to speak with a loan officer or use our locator tool to find a mortgage loan officer.

If you'd like to speak with one of our customer support representatives, please call us at 1-800-UCBANK1 (1-800-822-2651).

Didn't find what you are looking for? View All FAQs or Contact Us

Connect with a local lender.

Fill out the form below or call 1-800-914-8224 to get in contact with the Mortgage Services team.

Have a question about an existing home loan? Call 1-800-UCBANK1 (1-800-822-2651) and choose Option 6 to connect directly with our loan servicing experts.

Find Your Local Lender

Angie Abston

VP - Mortgage Loan Originator

(865) 271-1618 Email

NMLS# 773860

Tammy Acker

Mortgage Loan Originator

727-409-2847 Email

NMLS# 324771

Bob Alman

Mortgage Loan Originator

(678) 714-4385 Email

NMLS# 1178975

Jennifer Badger

Mortgage Loan Originator

828-835-4618 Email

NMLS# 473785

Susan Barkley

VP - Mortgage Loan Originator

(678) 989-3635 Email

NMLS# 527473

Craig Bland

Mortgage Loan Originator

984-867-8426 Email

NMLS# 1687090

Jason Blodgett

VP - Mortgage Loan Originator

(864) 591-5248 Email

NMLS# 723213

Bailey Boshers

Mortgage Loan Originator

(931) 797-9250 Email

NMLS# 1833461

Paula Buckles

Mortgage Loan Originator

(864) 646-2106 Email

NMLS# 546299

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© 2023 United Community Bank | NMLS# 421841 | ucbi.com/mortgage | United Community Mortgage Services is the mortgage lending division of United Community Bank. We are an approved seller/servicer for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Mortgage Corporation (Freddie Mac). Normal credit criteria apply. This is not a commitment to lend. Offer subject to change without notice.