HIGH BALANCE CONFORMING
(JUMBO CONFORMING or SUPER CONFORMING)
As you explore mortgage options, you will hear the term “jumbo conforming” or “super conforming” loan.” If so, you’re looking at higher priced properties for the area. These are homes requiring a mortgage that exceeds $417,000.
What makes a loan jumbo conforming?
A loan is considered a jumbo conforming if it exceeds what is known as the conforming loan limit. The current conforming loan limit for a single-family home in California is $417,000. These are for loans that will “conform” to the FNMA and FHLMC limits that allow lenders to offer lower rates for these loans.
If you live in a federally designated high-priced market, there are different high balance limits available with slightly higher rates than regular conforming loans. These loans have stricter underwriting requirements than standard conforming loans, but are generally priced lower than jumbo loans. Limits may be different for multi-unit properties.
How are jumbo conforming loans different?
Qualifying for a Jumbo Conforming loan usually requires tougher qualification standards than regular conforming loans. This can include lower income ratios, higher reserves (cash in the bank) and less cash out for refinancing. Jumbo Conforming loans also have higher interest rates compared to a conforming loan. Comstock Mortgage offers Jumbo Conforming loans (FNMA) and Super Conforming loans (FHLMC) which differ slightly with their requirements. Check with us to see which of these is best for your situation.
What are your options?
A Jumbo Conforming loan is one potential way to buy a higher-priced home, but with a slightly higher rate. To keep the better regular Conforming rate you can look at other options:
· Increasing your down payment. This is the simplest option. If you can put more cash toward the down payment, you will borrow less. This could be especially helpful to you if the mortgage you are considering is only slightly above the conforming loan limit. For more information about down payments.
OObtaining two mortgages. This is also called a Piggyback or Combination loan. This entails taking out a second, smaller mortgage at the same time as the first. By doing this, your first, larger mortgage would conform to the loan limit, and you may avoid some of the increased requirements and higher rates of a jumbo. However, the interest rate on a second mortgage is typically higher than on a first mortgage. We calculate a blended rate calculation to determine if this is best option. With this option you have the inconvenience of having to make two payments each month but it can provide a lower cost for your mortgage and is also an excellent way to avoid mortgage insurance that is usually required for less than 20% down. Call Cary to discuss options and see what the least expensive option is for you.