| Conventional Financing |
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Any mortgage loan other than an FHA, VA or RHS loan is Conventional. The Conventional loan category is further defined as "Conforming" and "Non-Conforming". Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with tye guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for Americans. Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year. The 2004 conforming loan limits for first mortgages are: One family: $333,700 Two family: $427,150 Three family: $516,300 Four family: $641,650 The maximum loan amount is 50% higher in Alaska, Hawaii and the US Vigin Islands. Properties with five or more units are considered commercial properties and are handled under different rules. |
