Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae and Freddie Mac. Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.
Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market - effectively decreasing the demand for non-conforming loans.
Conforming Loan Limits:
Number of Units Maximum original principal balance Alaska, Guam, Hawaii, and U.S. Virgin Islands only
NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.
FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.
FHA loans are an attractive option, especially for first-time homeowners:
Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.
Here's how it works:
Apply for a VA Loan with a VA Qualified Lender.
RHS Loan Programs:
The U.S. Department of Agriculture offers a variety of programs to help low to moderate-income individuals living in small towns or rural areas achieve homeownership. The Rural Housing Service (RHS) helps qualifying applicants, who cannot receive credit from other sources, purchase modestly priced homes as their primary residence.
RHS Loans are an attractive option because:
RHS loans can be used toward the purchase and renovation of a previously owned home or a new construction. Families must be able to pay their monthly mortgage, homeowner's insurance and property taxes.
Contact me to find out if you qualify for an RHS loan!
State and Local Housing Programs:
Many state, county and local government programs offer financing for qualifying low-to-moderate income families wishing to purchase their first home. Loan assistance programs like Mortgage Credit Certificate (MCC) offer a partial tax credit for interest on the loan.
These programs typically offer:
Jumbo Loans exceed the maximum loan amounts established by Fannie Mae and Freddie Mac conventional loan limits. Rates on jumbo loans are typically higher than conforming loans. Jumbo Loans are typically used to buy more expensive homes and high-end custom construction homes, and usually require a higher down payment than traditional loans.
B/C Loans do not meet the credit requirements of Fannie Mae and Freddie Mac. They are known as B, C and D paper loans. Loan applicants typically have a bad credit history, have filed for bankruptcy, or have had a property in foreclosure.
B/C Loans are often issued as temporary loans until the applicant can restore credit and qualify for conforming "A" loans. Interest rates on B/C Loans are generally higher than for conforming "A" loans.
Location Efficient Mortgage (LEM):
Location Efficient Mortgages are available to individuals purchasing more expensive homes in areas where with efficient public transportation systems. These loans take into account monies saved on the expenses related to owning or leasing automobiles.
While LEM loans will allow a purchaser to buy a house that is more expensive than they would qualify for using a traditional mortgage, it does not lower the monthly payment.
LEM loans are only available in certain markets:
Conventional loans are mortgage loans offered by non-government sponsored lenders. These loan types include:
To find out which loans work best for you, read through these diverse loan options and choose the one that fits your needs and preferences.
Fixed Rate Mortgage:
With a fixed rate mortgage, the interest rate does not change for the term of the loan; the monthly payment is always the same. Typically, the shorter the loan period, the more attractive the interest rate will be.
Payments on fixed-rate fully amortizing loans are calculated so that the loan is paid in full at the end of the term. In the early amortization period of the mortgage, a large percentage of the monthly payment pays the interest on the loan. As the mortgage is paid down, more of the monthly payment is applied toward the principal.
A 30 year fixed rate mortgage is the most popular type of loan when borrowers are able to lock into a low rate.
A 15 year fixed rate mortgage allows you to pay off your loan quicker and lock into an attractive lower interest rate.
Need to Refinance?
Save money by taking advantage of the lowest rates available. Whether you are looking to lower your rate, lower your monthly payment, or tap into your home's equity, use this FREE self-help tool to determine exactly what type of refinance solution is best for you.
Use your home to help eliminate bad debt and bundle your bills into one easy monthly payment. Whether you need to pay off high-interest credit cards or you just need cash now, use this FREE self-help tool to determine exactly what type of debt consolidation program is best for you.
Purchasing a Home?
Turn the home of your dreams into reality.
Whether you are buying your first home, second home, or vacation property, use this FREE self-help tool to determine exactly what type of purchase loan is best for you.