FLORIDA CONFORMING LOANS

What is a Conforming Loan?

Conforming loans are a type of mortgage that meets the guidelines set by Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that buy most of the mortgages in the U.S. from lenders. These guidelines include maximum loan amounts, borrower credit scores, down payment requirements, and debt-to-income ratios.

Our Florida Conforming Loan Programs

The primary types of conforming loans include:

1. Fixed-Rate Mortgages (FRMs): These loans have a fixed interest rate for the entire term of the loan, which is typically 15, 20, or 30 years. Borrowers prefer fixed-rate mortgages for their predictability, as the monthly principal and interest payments remain the same throughout the life of the loan.
2. Adjustable-Rate Mortgages (ARMs): ARMs start with a fixed interest rate for a certain period (usually 5, 7, or 10 years), after which the rate adjusts annually based on market conditions. ARMs often offer lower initial rates than fixed-rate mortgages, making them attractive to borrowers who plan to sell or refinance before the rate adjusts.
3. Conventional 97 Loans: This is a type of low down payment mortgage that allows borrowers to finance up to 97% of their home’s value, meaning they only need to put down 3%. The Conventional 97 loan is aimed at first-time homebuyers and requires at least one borrower to be a first-time homebuyer.
4. High-Balance Conforming Loans: In areas with high-cost housing, the FHFA allows for higher loan limits that exceed the standard conforming loan limits. These loans are designed to accommodate borrowers in markets where property prices are significantly above the national average.
5. HomeReady and Home Possible Loans: These are specialized conforming loan programs offered by Fannie Mae (HomeReady) and Freddie Mac (Home Possible) designed for low- to moderate-income borrowers. They offer low down payment options, reduced mortgage insurance costs, and flexible funding sources for down payments and closing costs.

When considering a conforming loan, it’s important to evaluate your financial situation, how long you plan to stay in the home, and the current market conditions to determine which loan type best suits your needs. For personalized advice and options tailored to your situation, especially in the Florida market, consulting with a mortgage professional at Florida Home Loans by Atlantic Mortgage & Finance can provide valuable insights and assistance.

What are the Conforming Loan Limits?

The Housing and Economic Recovery Act (HERA) mandates an annual adjustment to the baseline conforming loan limit for Fannie Mae and Freddie Mac, aligning it with the fluctuating average U.S. home price. Discover more about the conforming loan limit in your specific area!

Difference Between Conforming and Nonconforming Loan?

The key difference between these loan types is the loan amount requested. If the amount exceeds the conforming loan limit in your area, it falls into the nonconforming category.

What is the Benefit of Getting a Conforming Loan?

Conforming loans are the most common type of mortgage in the U.S. Some benefits include:

• Easy documentation requirements
• Higher loan-to-value (LTV)
• Potentially faster closing times