Allied Home Mortgage - Conventional Loans

FNMA/FHLMC Conforming Loan Programs

What is an FNMA/FHLMC loan? The Federal National Mortgage Association (FNMA or "Fannie Mae") and the Federal Home Loan Mortgage Company (FHLMC or "Freddie Mac") were established by the Federal Government to ensure a flow of capital to the home mortgage market. These agencies channel capital into the mortgage market by buying mortgages from lenders and reselling them to investors. To be eligible for sale to these agencies, loans must satisfy the FNMA/FHLMC guidelines for borrower credit-worthiness and property value. Loans that satisfy FNMA/FHLMC guidelines are called "conforming loans", "FNMA/FHLMC loans", or "Fannie/Freddie loans".

The standard FNMA/FHLMC loan program allows qualified borrowers to borrow up to 95% of the purchase price/appraised value (whichever is less) for the purchase of a principal residence, 90% for the purchase of a second home, and 85% for an investment/rental property. Limited cash-out (a.k.a "rate-and-term") refinance loans are available on principal residences up to 90% of the appraised value; and cash-out is available up to 85% (Certain restrictions apply; contact us for further information).

Both agencies have special loan programs for first-time homebuyers and borrowers with limited funds for a downpayment, low income, or less-than-perfect credit.

Both agencies allow us access to their automated underwriting programs so that we can quickly determine whether you qualify. The automated underwriting programs tend to be more lenient with respect to credit issues, reserve requirements, and debt-to-income ratios than manual underwriting guidelines. And the automated underwriting program is allowed to waive some of the standard documentation requirements for well-qualified borrowers, allowing us to streamline the application process for them.

To qualify for a FNMA/FHLMC conforming loan, borrowers must satisfy lender guidelines for income, assets, and credit. Maximum loan amounts apply; and maximum income limits apply in some FNMA/FHLMC programs. Maximum loan amounts for all states, except Alaska and Hawaii, are $417,000 for one unit properties, $533,850 for two units, $645,300 for three units, and $801,950 for four units. Loan amounts larger than the FNMA/FHLMC maximum loan amounts are considered Jumbo loans.

Is a FNMA/FHLMC conforming loan loan a good choice for me? For borrower's with good credit and the funds to meet the required down payment, conforming loans usually offer the lowest interest rates available. And unlike FHA loans, which also offer low rates, the required monthly mortgage insurance premium decreases with the loan-to-value (i.e., the loan amount as a percentage of the value of the property).

Summary of FNMA/FHLMC loan features:

Loans on principal residences of one to four units, second homes, and investment properties.
5% or higher downpayment from own funds required by standard eligibility guidelines; special programs allow as little as 3% and permit gift funds to be used.
Low rates.
Interest-only payments and 40-year amortization available as an option on some loans.
Mortgage Insurance required if loan-to-value is over 80%.
Secondary financing allowed. An 80% first-lien mortgage can be combined with a second-lien mortgage of up to 15%.
Seller contributions to closing costs allowed.
Special programs available for first-time homebuyers and borrowers that would not qualify under the standard guidelines.
Automated underwriting allows quick preapproval and streamlined documentation for well-qualified borrowers.

The above list of features is not meant to be complete or cover all cases. FNMA/FHLMC guidelines are complex and the requirements differ slightly between the FNMA and the FHLMC. The best way to find out whether you qualify is to apply. Contact us for more information, or complete and submit our short prequalification form.

Allied Home Mortgage offers competitive rates, low fees, and superior service on hundreds of loan programs, including conventional, FHA, VA, and the USDA Guaranteed Rural Housing loan. At the Hillsboro, Oregon branch we are licensed to originate home loans throughout Oregon. We specialize in financing real estate purchase transactions, including manufactured homes. We also offer rate-and-term refinances, cash-out refinances, home equity loans, rehab loans, and reverse mortgages. We welcome applications from first-time homebuyers, borrowers with limited income and assets, and credit-challenged borrowers that have been turned down elsewhere. Click here for more information about us.

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