What are Conforming Loans?
A Conforming mortgage loan (also called Conventional loan) is a type of mortgage loan that conforms to the guidelines set forth by Fannie Mae and Freddie Mac, which are government-sponsored entities. These guidelines include limits on loan amounts, credit score requirements, debt-to-income ratios, down payment, and other factors determining a borrower’s eligibility and qualification.
What are the different types of Conforming Loans?
There are different types of conforming loans available, including fixed-rate mortgages and adjustable-rate mortgages (ARMs). A fixed-rate mortgage has a fixed interest rate and monthly payment for the life of the loan. This can provide stability and predictability for homeowners who want to budget their monthly expenses. A 30-year fixed-rate mortgage is the most common type of conforming loan, but 15-year and 20-year fixed-rate loans are also available.
What are 2023 Conforming Loan Limits and Down Payment Requirements?
In 2023, the maximum loan limit for conforming loans is $726,200 (base loan limit). Some high-cost counties allow loan limits as high as $1,089,300 (high balance loan limit) for 1-unit properties. 1-unit property means a single-family home, a town home, or a condominium. Loan Limits are higher for multi-unit (2-4 units) homes.
The minimum down payment requirement for a base loan limit is only 3% for first-time home buyers, and for high-balance loans, you can get a loan for as low as 5%.
What are HomeReady and HomePossible Loans?
HomeReady and HomePossible are ideal loans for credit-worthy low-income borrowers. Offered by Fannie Mae and Freddie Mac respectively, they usually have lower interest rates and mortgage insurance premiums.
Qualifying income can include rental and boarder income, including income from Accessory Dwelling Units. Your qualifying income needs to be less than 120% of the Area Median Income (AMI) to qualify. You can check your eligibility here.
How to get and where to apply for a Conforming Loan?
To be eligible for a conforming loan, borrowers must meet certain requirements. These requirements include a minimum credit score, typically around 620, and a debt-to-income ratio of no more than 45% (though some borrowers may qualify with a ratio as high s 50%). Borrowers must also provide documentation of their income, assets, and employment history.
At InstaMortgage, we can help you qualify for a conforming loan and get you a mortgage with very competitive rates. With a 4.9-star rating on Google, we are your go-to lender whether you’re looking to get pre-approved, close a home loan fast, or refinance your existing loan.