Characteristics of a Conforming loan

• 1. Loan limits –

  The loan amount may not exceed county limits. In 2019, the baseline loan limit for most counties across the U.S. is $484,350. More expensive markets, such as Hawaii and Alaska, have conforming loan limits as high as $726,525.¹ Download conforming loan limits for all counties on loanlimits.org.

• 2. Down payment –

  Borrowers can qualify for financing up to 97% of the purchase price, meaning most lenders require a minimum 3% down payment. For a Conforming loan higher than the baseline loan limit, also known as a high-balance loan, borrowers can qualify for financing up to 95%.

• 3. Credit score –

  Homebuyers with scores as low as 620 may qualify

• 4. Debt-to-income ratio –

  Recently, both Fannie Mae and Freddie Mac announced that they would allow DTI limits of up to 50% depending on the borrower’s credit score and reserve requirements with an automated underwriting approval.^{2 3}

• 5. Rate options –

  Both adjustable-rate mortgages and fixed-rate mortgages are available. An adjustable-rate mortgage*, better known as an “ARM,” is a home loan with an interest rate that can change periodically. Your monthly payments will go up or down when interest rates fluctuate. A fixed-rate mortgage is a loan where the interest rate remains the same for the entire term of the loan, resulting in a fixed payment amount that will not change. A fixed-rate mortgage is a more common option.