Conventional loans are actually any type of creditor agreement that are not financed by the Veterans Administration (VA), or supported by the Federal Housing Administration (FHA). In general, all conventional loans are protected by the government sponsored entities such as Fannie Mae (FNMA) and Freddie Mac (FHLMC).
There are two different types of Conventional loans: Conforming and Non-Conforming loans. Conforming loans have to meet the guidelines set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Any loan which does not meet these guidelines is a non-conforming loan.