This week I will be discussing
conforming loans, as a sequel to last week’s blog, where we discussed
combination loans. A conforming loan is a
mortgage loan that is equal to or less than the dollar amount established
by the conforming loan limit set by Fannie Mae and Freddie Mac. The term "conforming" most often refers to a
specific mortgage amount; however, the terms "conforming" and
"conventional" are frequently used interchangeably. Mortgages that
exceed the conforming loan limit are classified as non-conforming or jumbo
mortgages.
The Office of
Federal Housing Enterprise Oversight (OFHEO) sets the conforming loan limit on a yearly basis.
The OFHEO has regulatory oversight to ensure that Fannie Mae and Freddie Mac
fulfill their charters and missions to promote homeownership for lower income
and middle class Americans. It’s set to provide loan limits and agreements that
apply to buyers with less money to spend on a home and those looking for less
expensive houses.
The OFHEO uses
the October to October percentage increase/decrease in average housing prices
in the Monthly Interest Rate Survey of the Federal Housing Finance
Board (FHFB)
to adjust the conforming loan limits for the coming year. In other words, they base the loan limit for the following
year on the average house prices for the current year.
The term
conforming loan became popular sometime after 1970 when Freddie Mac and Fannie
Mae created standardized loan documents and processes. If a buyer fits the
criteria set forth by Freddie
Mac and Fannie Mae, it is known as a conforming loan. Conforming loans for a
One Unit primary residence in our area have the following loan limits and
minimum down payment requirements:
Conforming Loan; maximum loan amount
is $417,000
Minimum dawn payment is
5%
Conforming High Balance Loan;
maximum loan amount 1s $625,500
Minimum dawn payment is
10%
There is less
risk with a conforming loan because lower loan amounts
are involved. If you fit the qualifications to obtain a conforming loan then
you can use it to purchase your next home. As a loan officer for Intercoastal
Mortgage Company, I can not only supply you with the most professional service,
but the best quality a lender can provide. We specialize in many different
types of loans and are here to help you achieve your dream. Contact me to beginthe process.