High-Balance Conforming Loans For High-Cost Homebuyers
In this blog, we will cover and discuss high-balance conforming loans for high-cost homebuyers. There are certain areas throughout the United States where it is considered high-cost areas. In high-cost areas, loan limits are higher than the traditional loan limits. The Federal Housing Finance Agency (FHFA) has increased the conventional loan limit to $647,200 for single-family homes for 2022. The FHFA has higher loan limits in high-cost counties.
2022 Loan Limit on High-Balance Conforming Loans For High-Cost Counties
Conventional loans in high-cost areas are called high-balance conforming loans. High-balance conforming loan limits for high-cost counties in the nation on single-family homes have been increased to $970,200 for 2022. In this blog, we will discuss High-Balance Conforming Loans and what constitutes High-Balance Conforming Loans.
Traditional Versus High-Balance Conforming Mortgages
Conventional Loans are called conforming loans. The reason being is conventional loans needs to conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines. If conventional loans do not conform to Fannie and/or Freddie Guidelines, Fannie/Freddie will not buy them on the secondary market. Direct lenders use their warehouse lines of credit to fund conventional loans. Once the loan is funded, they sell the loan to the secondary market. With the proceeds, they replenish their warehouse lines of credit and repeat the process. The maximum conforming Fannie/Freddie Loan Limit is $647,200 for 2022. However, conforming loan limits are increased to $970,800 in high-cost areas.
What Are High-Balance Conforming Loans
High-Balance conforming loans are a higher loan limit than conventional loan caps in high-cost areas. Many counties in New Jersey, Pennsylvania, California, Colorado have high-cost areas as a designation. High-Balance conforming loans are available in all high-cost areas. Conforming loan limit cannot be exceeded on conventional loans. If the loan balance exceeds the conforming loan limit, it is classified as non-conforming loans or Jumbo Loans. High-Balance conforming loans are any conventional loans that exceed $647,200 and do not surpass $947,220.
Refinancing Jumbo Mortgage To High-Balance Conforming Mortgages
Any home loan exceeding the conforming loan limits is considered nonconforming or jumbo loans. Jumbo loans are viewed as riskier loans by lenders. Therefore, Jumbo Mortgage Rates are higher than conventional mortgage rates. Many homeowners who have Jumbo Loans may have loan balances within High-Balance Conforming Mortgages and its loan limit. The FHFA increased conforming loan limits for the past three years due to rising home prices. Homeowners with Jumbo Loans should consider refinancing their Jumbo Loans to High-Balance Conforming Loans and see what type of net tangible benefit they can get. Non-conforming loans are not backed by Freddie Mac or Fannie Mae.
NON-QM Loans Versus High-Balance Loans
NON-QM Loans are portfolio loan programs offered by Gustan Cho Associates. There are no waiting period requirements after bankruptcy and foreclosure on non-QM loans. Late payments in the past 12 months are allowed on non-QM loans. There is no private mortgage insurance premium required. Borrowers with credit scores down to 500 FICO can qualify.
Non-QM Jumbo Mortgages with No Maximum Loan Limit
The best part of non-QM mortgages is there are no maximum loan limits. Non-QM loans are not only for borrowers with bad credit. Many higher credit high-income borrowers benefit with non-QM mortgages. Self-employed borrowers can qualify for 12 months bank statement loan program with no income tax returns required. Down payment is normally 10% to 20% on non-QM loans versus 5% down on high-balance conforming loans. With high balance conforming loans, private mortgage insurance is required with higher than 80% LTV. Both High-Balance Loans and NON-QM Loans allow primary, second homes, 2 to 4 unit homes, and investment home financing.
Qualifying With A Lender With No Overlays
For more information in qualifying for high-balance mortgage loans and/or non-QM mortgages, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected] Gustan Cho Associates Mortgage is available 7 days a week, evenings, weekends, and holidays.