What is a Conventional Conforming Loan?
Conventional loans are either termed “conforming” or “non-conforming.” A conforming loan follows (i.e., conforms to) guidelines set by the government sponsored enterprises (GSE’s), Fannie Mae or Freddie Mac. Underwriting guidelines can be slightly different between Fannie Mae and Freddie Mac, but they are largely the same. Non-conforming loans follow other underwriting guidelines that are determined by large banks and other investors that ultimately fund those loans. Jumbo loans are an example of non-conforming loans
Conforming loans represent the majority of all loans provided to homeowners. Loan limits are based on location, with urban and metro areas having higher amounts. They are grouped as follows (beginning Jan 1, 2023):
- National Conforming Limit: up to $726,200
- “High balance” or “Super Conforming” Limit: up to $1,089,300 (for “high cost” areas, such as the DC metro area).
Oak Hill Mortgage, LLC has access to various conforming loan programs, with down payments as low as 3%. To avoid paying mortgage insurance for a conventional mortgage loan, you will need to choose one of 3 options:
- Provide a minimum 20% down payment (based on the lower of sales price or appraised value)
- Request Lender Paid Mortgage Insurance (LPMI), which will raise your interest rate
- Get a 2nd Mortgage to accompany your 1st Mortgage
Whether you’re buying a home or want to refinance your mortgage, a conventional loan might be right for you. Contact Oak Hill Mortgage, LLC today, and we can help you determine the best loan for you.
Call (703) 861-5369.