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What is a Conforming Loan?

March 23rd, 2018 5:41 AM by Jackie A. Graves, President

What Is a Conforming Loan?

A conforming loan is one that meets the standards of loan guidelines established by government-sponsored enterprises Freddie Mac and Fannie Mae. The most well-known conforming loan guideline is the size of the loan. There are two different types of conforming loan size limits: standard and high-cost area. Most counties in the United States have a conforming loan limit of $424,100 for a one-unit property.

However, there are high-cost areas of the country that have higher loan limits. Most high-cost areas have maximum loan limits for a one-unit property around $636,150. Conforming loans must also meet other guidelines related to a borrower’s loan-to-value ratio, debt-to-income ratio, credit score and history, documentation requirements, etc.

Why Do I Want a Conforming Loan? Are There Alternatives?

Conforming loans usually have lower interest rates than non-conforming loans because they are easily bought and sold on the secondary mortgage market. They tend to be a less risky investment for lenders.

If you are in need of a large loan amount you may need a jumbo loan. A jumbo loan is a non-conforming loan because it exceeds the county’s general or high-loan limit. In most areas of the country that would mean a loan amount of more than $424,100.

If you don’t qualify for a conforming loan, getting an FHA loan might also be a good alternative because their loan limits vary by county. You can shop for live, customized conforming, jumbo and FHA loan quotes on Zillow.

How Do I Look Up My County’s Conforming Loan Limit?

To find the loan limits for conforming loans in your state and county, check out our complete list of Conforming Loan Limits for 2017.

To view the original article click here             Apply to Buy a Home             Apply to Refinance

Posted by Jackie A. Graves, President on March 23rd, 2018 5:41 AM

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