 Conventional
Loans are secured by
government sponsored
entities or GSE's
such as Fannie Mae
and Freddie Mac or
by private investors
for loan amounts
higher than the
limits set by the
GSE's. Conventional
loans can be made to
purchase or
refinance homes with
first and second
mortgages on single
family to four
family homes.
In general, Fannie
Mae and Freddie
Mac's single family,
first mortgage loan
limit is $333,700 in
2004. This limit is
reviewed annually
and, if needed,
changed to reflect
changes in the
national average
price for single
family homes. The
current loan limit
applies to all
conventional
mortgages delivered
after January 1,
2004.
2004 Conventional
Loan Limits:
First mortgages
- One Family
loans: $333,700
- Two Family
loans: $427,150
- Three Family
loans: $516,300
- Four Family
loans: $641,650
Note: Maximum
original loan
amounts are 50
percent higher
for first
mortgages on
properties in
Alaska, Hawaii,
Guam and the
U.S. Virgin
Islands.
Second
Mortgages
- $150,350 (in
Alaska, Hawaii,
and the US
Virgin Islands:
$225,525)
Loans which are
larger than the
limits set by Fannie
Mae and Freddie Mac
are called jumbo
loans. Because jumbo
loans are not funded
by these government
sponsored entities,
they usually carry a
higher interest rate
and some additional
underwriting
requirements. A
strategy to lower
your overall
interest payments if
your purchase or
refinance balance is
above $333,700 is to
use a combination of
both first and
second trust money,
referred to as an
80/10/10, 80/15/5 or
80/20. Every
situation is
different, but it is
one more option to
consider.
In addition to
common loan
structures such as
fixed rate,
adjustable rate and
balloon loans,
Fannie Mae and
Freddie Mac also
have loan programs
for low to no down
payments, community
lending and
affordable housing
initiatives,
construction to
permanent, home
improvement and
reverse mortgages.
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