.png)
Conforming
Conforming loans have terms and conditions that fallow the guidelines set by Fannie Mae and Freddie Mac. These loans are called A- Paper loans, or prime loans. Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment and suitable properties. To get the current loan limits, visit the Fannie Mae website at www.fanniemae.com
Non-Conforming
Sometimes either the borrowers creditworthiness or the size of the loan does not meet conventional lending standards. These loans consist of Jumbo or Subprime loans. Jumbo loans exceed the maximum amount and will usually carry a high interest rate. Subprime loans don't meet credit requirements and due to the high risk of these loans, they require a larger down payment.
PMI
Conventional lenders will require PMI on low down payment loans for protection in the event that the homeowner fails to make their payments. It is usually paid for as part of their monthly principal. To remove PMI, you must have at least 20 percent equity in the home. You may ask the lender to cancel PMI when you have paid down the mortgage balance to 80 percent of the home's original appraised value.