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Mortgage Facts
Loan Types
The most popular loan programs offered are: Conventional, FHA, VA, USDA/Rural Development, First Time Home Buyers, Bond Money, 100% Financing, Reverse Mortgages.
Conventional Loans and Government Loans
Mortgages are also classified as either “conventional loans” or “government loans.” Conventional loans can be conforming or jumbo, but are not insured or guaranteed by the government. Then there are government loans, such as the widely popular FHA loan. This type of mortgage is backed by the Federal Housing Administration (FHA). Another common government loan is the VA loan, backed by the Department of Veteran Affairs. The max loan amount for these types of loans varies by county.
Conforming Loans and Non-Conforming Loans
One way home loans are differentiated is by their GSE eligibility. If the loan meets requirements set forth by Fannie Mae and Freddie Mac, it is considered a conforming loan. If the loan doesn’s meet all the underwriting requirements set forth by the pair of GSEs, it is considered “non-conforming.” One of the main guidelines that determines whether a mortgage is conforming or not is loan amount. Generally, a mortgage with a loan amount below $417,000 is considered conforming, whereas any loan amount above $417,000 is considered a “jumbo loan.” However, in Alaska and Hawaii the confirming limit is $625,500.Note that the conforming limit may change annually, and has risen quite a bit in the past few years as housing prices skyrocketed. A jumbo loan may meet all of Fannie Mae and Freddie Mac’s loan underwriting guidelines, but if the loan amount exceeds the conforming limit, it will be considered non-conforming and carry a higher mortgage rate as a result. If your loan amount is on the fringe of the conforming limit, sometimes simply dropping your loan amount a few thousand dollars can lower your mortgage rate tremendously, so keep this in mind anytime your loan amount is near the limit.
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