Conforming Loans (Fannie Mae And Freddie Mac)

The minimum down payment for conventional financing is 3%. Effective Nov. 16, 2013, Fannie Mae will be adjusting the minimum down payment to 5%. Conforming loans are loan products which are underwritten according to Fannie Mae or Freddie Mac underwriting guidelines and almost all mortgage bankers, and mortgage brokers offer conforming loans. Underwriting to these Agency guidelines will allow the bank to be able to sell or transfer the mortgage to another bank or investor after the loan is funded, and allow the initial bank to replenish their available funds to loan to another borrower.

On conventional loans, if the borrower puts less than 20% down on the loan, Mortgage Insurance (MI) will be required. MI can be paid by the lender OR by the borrower.

CONVENTIONAL LOANS can be conforming or nonconforming. Loans above the lending limits set by Fannie Mae and Freddie Mac are called nonconforming or jumbo loans. Most conventional mortgages can have either fixed or adjustable interest rates.