Types of Loans

Real Estate

Home loans amounts at or under these limits qualify as conforming loans. They "conform" to guidelines set forth by Fannie Mae and Freddie Mac. Conforming loans make up the majority of residential loans funded. Loan amounts that are above these limits are referred to as jumbo loans.

 With a conforming loan, lenders are able to sell the mortgage in the secondary market, replenishing their credit lines in order to make more loans. Jumbo loans have no such robust secondary market. When a lender approves a jumbo loan, it assumes the risk should the loan ever go into default.   This makes it more difficult to qualify for a jumbo loan.

The minimum credit score for most conforming loans ranges from 580 to 620.  For Jumbo loans minimum credit ranges from 720 to 740. Some jumbo loans can require a lower score, but the rates and terms are much more stringent.  Down payment requirements for jumbo loans are also much higher.
 
Conforming Loans:

A buyer can secure a conforming loan with a down payment of 5% or even 3% for special first-time homebuyer programs with the help of private mortgage insurance.

 Jumbo Loans:

Don’t have insurance policy available and require a minimum down payment of 20% of the sale price of the home.  Providing a higher down payment will make it easier to qualify.

 If you are planning to purchase your first home or investment property, call me and I will be happy to guide you to obtain the right loan for you.  I am always ready to help! Call me at (713) 598-0128.

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