Conforming Loans

Conforming loans are mortgages that conform to financing limits set by the Federal Housing Finance Agency (FHFA) and meet underwriting guidelines set by Fannie Mae and Freddie Mac, whereas nonconforming loans do not. Conforming and nonconforming loans are both types of conventional loans.

Non-Conforming Loans

A Non-Conforming Loan is a loan that fails to meet bank criteria for funding.

Reasons include the loan amount is higher than the conforming loan limit (for mortgage loans), lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral backing it. In many cases, non-conforming loans can be funded by hard money lenders, or private institutions/money. A large portion of real-estate loans are qualified as non-conforming because either the borrower's financial status or the property type does not meet bank guidelines. Non-conforming loans can be either Alt-A or subprime loans.

The flexibility of private money can allow for a much wider range of deals to be funded, although more detailed and substantive collateral and documentation may be required by a lender.

FHA Loans

An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payments and credit scores than many conventional loans.

Jumbo Loans

A jumbo loan, also known as a jumbo mortgage, is a type of financing that exceeds the limits set by the Federal Housing Finance Agency (FHFA). Unlike conventional mortgages, a jumbo loan is not eligible to be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac.

USDA Loan Program

USDA loans are issued through the USDA loan program, also known as the USDA Rural Development Guaranteed Housing Loan Program, by the United States Department of Agriculture. In 2017, as a part of its Rural Development program, the USDA helped some 127,000 families buy and upgrade their homes.

B/C Loans

B/C Loans do not meet the credit requirements of Fannie Mae and Freddie Mac. They are known as B, C and D paper loans. Loan applicants typically have a bad credit history, have filed for bankruptcy, or have had a property in foreclosure.

B/C Loans are often issued as temporary loans until the applicant can restore credit and qualify for conforming "A" loans. Interest rates on B/C Loans are generally higher than for conforming "A" loans.

Down Payment Assistance Programs

Down payment assistance (DPA) programs help homebuyers with loans or grants that reduce the amount they need to save for a down payment. There are four main types of DPA:

• Loans that have to be paid down along with with your first (main) mortgage

• Loans with deferred payments, which only have to be paid when you move, sell, refinance

• Loans that are forgiven over a set number of years, and only need repaying if you move, sell, refinance

• Grants, which are essentially gifts that never have to be repaid

State and Local Housing Programs

State and Local Housing Programs:

Many state, county and local government programs offer financing for qualifying low-to-moderate income families wishing to purchase their first home. Loan assistance programs like Mortgage Credit Certificate (MCC) offer a partial tax credit for interest on the loan.

    These programs typically offer:

        More relaxed qualifying guidelines
        Lower upfront fees
        Lower interest rate
        Fixed rate

VA Loans

Designed to offer long-term financing to American veterans, VA mortgage loans are issued by federally qualified lenders and are guaranteed by the U.S. Veterans Administration. The VA determines eligibility and issues a certificate to qualifying applicants to submit to their mortgage lender of choice. It is generally easier to qualify for a VA loan than conventional loans.

Here’s how it works:

• 100% financing without private mortgage insurance or 20% second mortgage.

• A VA funding fee of 0 to 3.3% (this fee may be financed) of the loan amount is paid to the VA.

• When purchasing a home, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less.

• When refinancing a home, veterans may borrow up to 90% of reasonable value in order to refinance where state law allows.

Apply for a VA Loan with a VA Qualified Lender.