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What is a Conforming Loan?
A Conforming loan is a mortgage loan that “conforms” to the underwriting standards of Fannie Mae or Freddie Mac. All Conforming loans go through an Automated Underwriting System (AUS) prior to an actual underwriter reviewing the file.
Conforming loan limits in California are the maximum loan amount a lender can lend under current Conforming guidelines.
A Conforming loan is a Conventional Loan and a Conventional loan is any mortgage loan that is not backed by the U.S. Government. FHA home loans and VA home loans are backed by the U.S. government and are not Conforming nor are they Conventional loans.
The Conforming loan program offers some great opportunities for those looking to purchase a home. From First Time Home Buyers to seasoned investors; conforming loans have low-interest rates at great terms.
You can put down as little as 3% and the loan process for a Conforming loan is very efficient as it allows for 2-3 weeks closing periods if the buyer and seller are in a rush to close quickly.
When it comes to refinancing a mortgage in California; the Conforming loan program is perhaps the most popular. Like purchases, you can get an appraisal waiver and you can close fairly quickly due to every loan being underwritten by the AUS of Fannie Mae or Freddie Mac.
Mortgage Refinance interest rates are affected by a borrower’s financial credentials.
Looking for the Right Conforming Fixed Rate Loan?
CalSun Mortgage was founded 35 years ago as a unique and innovative California lending institution. Today, we operate as a reputable and trustworthy mortgage lender committed to providing every client with the low rates and exceptional service they require. CalSun Mortgage works hard to ensure you get the solutions and answers you need every step of the journey.
If you are looking for a mortgage that ticks all the boxes with lower interest rates and fast approvals, CalSun Mortgage is perfect for you. We operate across California and are always willing to cater to new clients.
Efficiency, Simplicity, and Friendly Professional Service are the pillars and core of our organization. We are committed to deliver what we promised.
In most counties in California, the Fannie Mae and Freddie Mac baseline conforming loan limit is currently $548,250, but in some high-cost counties, it’s as high as $822,375.
A conforming loan meets the requirements for selling to Fannie Mae or Freddie Mac, the two largest mortgage buyers in the United States. Non-conforming loans, on the other hand, do not meet those criteria and hence cannot be sold to Fannie Mae or Freddie Mac.
FHA mortgage rates are determined by Ginnie Mae (GNMA) mortgage bonds. Conforming mortgage rates, on the other hand, are based on Fannie Mae and Freddie Mac-backed mortgage bonds. This is why conforming loans are classified as conventional rather than FHA.
All conforming loans are conventional, but not all conventional loans are conforming.
Because conforming loans have a wider secondary market, they usually have lower interest rates, which can result in lower monthly payments and less expenditure over the life of the loan.
The Federal Housing Finance Agency (FHFA) recently announced the conforming loan limits (CLLs) for Fannie Mae and Freddie Mac mortgages to be acquired in 2022. The CLL for one-unit properties in most of the United States in 2022 will be $647,200, $98,950 higher than the $548,250 limit in 2021.
The Housing and Economic Recovery Act establishes the conforming loan limit, which is determined by the county. Each year’s limits are based on the FHFA’s House Price Index report. The national baseline limit, which reflects the change in the average U.S. house price, will be applied to most counties.
A conventional mortgage requires a minimum down payment of 3%, but borrowers with poorer credit scores or larger debt-to-income ratios may be required to put down more.