Conforming Mortgages are the most common loans used for purchasing a home or refinance. It is best described as loans that conform to Fannie Mae or Freddy Mac lending standards. Both institutions have some variations from one another but for the most part their guidelines are similar.
There are no location or income restrictions. There is a loan limit of $417,000. Some area's may temporarily have higher limits. These loans are most commonly used by people who either put 20% down or have 20% equity in their existing home because PMI is not required on loans less than 80% of the value. These loans also do not charge funding fees or upfront mortgage insurance premiums like government loans.
If you are using a Conforming Loan to purchase a home the minimum required down payment is 5% of the purchase price or appraised value. (whichever is less). There may be restrictions for an additional 5% down if the home is located in a declining market.
If you are using a Conforming Loan to refinance your home you can borrow up to 90% of the homes appraised value when you are paying off existing mortgages on the home and receiving no cash from the loan. If you want to receive cash from the loan for home improvements, to pay off bills, or to have some extra cash you are limited to 80% of the homes appraised value.
Second Homes and Investment are limited to 90% whether you are purchasing or refinancing the properties. However, there currently are no PMI companies insuring these loans. Therefore you will be limited to 80%. You cannot have more than 10 financed properties. However, the majority of lenders do not want more than 4.
Fannie Mae offers a program used to purchase its foreclosed inventory called a HomePath mortgage. Eligible properties can be found here. This program may not require an appraisal. It does not require PMI. It allows investors the opportunity to finance up to 90% of the purchase price. It has a purchase with rehab option where you can make repairs to the property with the loan used to purchase the home.
Fannie Mae offers a program to home owners in which Fannie Mae owns the mortgage. It is called a DU Refi Plus. It allows a refinance up to 125% of the value. Most lenders will not exceed 105% though.
Freddy Mac offers the same through their Freddy Mac Relief Refinance.
Both of these programs are temporary and were created to help borrowers refinance into today's lower rates despite their property declining in value.
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Conforming Purchase:
- As little as 5% down
- Investment or Second Homes Allowed
- Lower Rates For Better Credit
- Seller Can Contribute Up To 6% Of The Purchase Price To Pay Closing Cost's
- No Income or Property Location Restrictions
- 20% Down Does Not Require PMI
- No Funding Fee or Up Front Mortgage Insurance Charge
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Conforming Refinance:
- Up to 95% Rate and Term
- Up to 80% Cash Out
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