There are two types of conventional loans; conforming and non-conforming.
Conforming mortgages meet the requirements of two government sponsored enterprises, Fannie Mae and Freddie Mac. They have the same maximum loan limits as FHA loans; however, they require a higher credit score than FHA loans, a minimum of 620, and most require a higher down payment of at least 5%. There are also two new programs, HomeReady® and Home Possible®, for low income borrowers and/or properties in under-served areas that allow down payments as little as 3%.
Non-conforming mortgages are loans that do not fit into FHA, Fannie Mae, or Freddie Mac guidelines. Non-conforming loans may include mortgages that have a loan amount larger than the FHA maximum loan limits, which are also known as Jumbo loans.
Non-conforming loans can also be non-QM loans, which have different requirements by which a borrower can qualify. Non-QM loans, include asset depletion, self-employed bank statement programs, no debt service coverage investor cash-out refinances, foreign investors and more.
- Asset Depletion: This is a method of qualifying for a loan based on assets alone, not income. Your total assets are calculated and used to determine if you can pay back your mortgage using them.
- Self-Employed Bank Statement: Can lend you up to 70% of a 1-4 family property’s value regardless of how much income it generates.
- No Debt-Service Coverage Investor: We will lend you up to 70% of a 1-4 family property’s value regardless of how much income it generates.
- Foreign Investor: Foreign Nationals who possess a passport from an eligible country can obtain financing for 1-4 family homes and approved condominiums.