When it comes to home financing, conventional loans are one of the most flexible mortgage solutions available. These mortgages are fully funded and insured through private lenders, while nonconventional loans are government backed, at least in part. Conventional loans are available with fixed or adjustable rates and for terms up to 30 years. Because they are so flexible in terms of underwriting, these loans are popular among clients with a wide range of needs. The BBC Group of mortgage professionals are skilled with conventional and nonconventional mortgage options, and we can help guide you through your options. Contact us to learn more and get a free quote for a conventional loan in Anaheim, Riverside, Long Beach, or Carson, California.
What Makes a Conventional Loan Conventional
There is a wide array of conventional loans. Because these mortgages are privately insured and funded, they are slightly more of a risk than nonconventional loans, which have extra security because of their government backing. There are two main divisions of conventional loans: conforming and nonconforming.
Conforming loans are those that conform to guidelines set by mortgage giants Fannie Mae and Freddie Mac, which are government-sponsored entities (though not part of the government officially). These GSEs purchase mortgages in bulk from lenders and sell them to investors. Fannie Mae and Freddie Mac will only purchase mortgages up to a certain limit. Loans within the limit are conforming, and those that exceed it are nonconforming or “jumbo” loans.
Nonconforming loans are kept on lenders own books and aren’t sold to investors. Because of this, they are slightly more of a risk to lenders, and they typically have higher interest rates and may have more stringent requirements for borrowers. They commonly also require a down payment of 20-30%.
Fannie Mae and Freddie Mac set different conforming loan limits depending on where you live. In Orange and Los Angeles Counties where the cost of living is among the highest in the country, the limits are:
- $679,650 for a one-unit home
- $870,225 for a two-unit home
- $1,051,875 for a three-unit home
- $1,307,175 for a four-unit home
In Riverside, county, the limits are:
- $453,100 for a one-unit home
- $580,150 for a two-unit home
- $701,250 for a three-unit home
- $871,450 for a four-unit home
If you’re unsure about what type of loan you’ll need, one of our mortgage professionals can walk you through your options.
Your Partner in Home Financing
At BBC Group, we’re committed to connecting our borrowers with the right mortgage solution for their needs. Whether you’ve just begun the process of looking for a home or have already talked to lenders to get quotes, we’re happy to help. We work with clients in Anaheim, Riverside, Long Beach, and Carson, California, and we know the local market well. When you’re ready to get started, contact us to schedule a consultation or get answers to any of your questions about conventional loans.