Conforming Loan Limits In California

Conforming Loan Limits In California

Conforming Loan Programs

Conforming loan programs, which usually have low mortgage rates at great terms, are one of the most popular loan programs out there. Down below we will go over everything you need to know about Conforming loans, what type of Conforming loans are available, and getting qualified.

What Is A Conforming Loan?

A Conforming loan is a mortgage loan that “conforms” to the underwriting standards of Fannie Mae or Freddie Mac. All Conforming loans go through an Automated Underwriting System (AUS) prior to an actual underwriter reviewing the file.

Conforming loan limits in California are the maximum loan amount a lender can lend under current Conforming guidelines.

A Conforming loan is a Conventional Loan and a Conventional loan is any mortgage loan that is not backed by the U.S. Government. FHA home loans and VA home loans are backed by the U.S. government and are not Conforming nor are they Conventional loans.

What Types Of Conforming Loans Are There?

The most popular Conforming loans are the 30-year Fixed-Rate Mortgage (FRM) loans and the 15-year fixed-rate loan. Most homeowners or homebuyers go with either a 30-year or 15-year fixed-rate program however there are many other options. Here is a full list of all the fixed-rate mortgage options with Conforming loan limits.

 

Is A Conforming Loan Right For You?

If you have a credit score above 700 and a debt-to-income ratio below 50% than a Conforming loan might be right for you even if you only have 3% down or 3% equity (if you’re refinancing).

Conforming loans offer some of the best mortgage rates and for those that have less than 20% down (or equity) you’ll have a lower Mortgage Insurance (MI) cost.

In addition to the lower MI cost, you’ll be able to get rid of the MI whereas on an FHA loan it’s permanent.

California Conforming Loan Limits

Here are the 2021 Conforming limits for all 58 counties in California. “One-Unit” refers to a property with one structure (ie a Single Family Residence – SFR), “Two-Unit” is a Duplex, etc. Home values have increased over the last few years and raising the loan limits allows more people to qualify for the best available mortgage rates. The Federal Housing Finance Agency (FHFA) updates their conforming loan limits every year.

Requirements For Conforming Loan:

A lot goes into getting qualified for a Conforming Loan and the actual guide issued by Fannie Mae is 1250 pages. We won’t go into everything; just the most important areas you should be aware of as of January 1, 2021:

  • The minimum down payment for a purchase is 3% down or the minimum amount of equity in a home for a refinance is 3%.
  • Generally speaking, you need above a 620 credit score to obtain a Conforming loan. And getting qualified for scores below 700 gets more difficult as you move further down.
  • The debt-to-income ratio should be 50% or lower.
  • Most Conforming loans do not need liquid asset reserves however some do. If you are purchasing a rental property (or refinancing a rental property) you’ll need to show some liquid reserves. If you have a low credit score, a debt-to-income ratio above 45%, and are taking cash out you’ll need to show some liquid reserves.

Rates are subject to change without notice. Minimum Loan amount $200,000, California only. LendingPlace is a subsidiary of LendingPlace, Inc. NMLS ID: 2003033 licensed by DFPI Lic: 60DBO-116526.  Some loans are arranged in collaboration with Robbins and Lloyd Mortgage NMLS ID: 233138, licensed by CalDRE: 01896646. All rights reserved by LendingPlace Inc.