Ave Mortgage

Opening Doors — Closing Loans

  • Home
  • About
    • About Us
    • Privacy Policy
    • Texas Complaint and Recovery Fund Notice
    • Accessibility Statement
  • Blog
  • Resources
    • Closing Costs
    • Home Appraisal
    • Home Inspection
    • Loan Checklist
    • Loan Process
    • Loan Programs
    • Mortgage FAQ
    • Mortgage Glossary
  • Reviews
  • Calculator
  • Contact

Understanding The Differences Between Conforming Loans And Jumbo Loans

January 6, 2022 by Kay Monigold

Understanding The Differences Between Conforming Loans And Jumbo LoansPotential homeowners need to understand the different types of loans available. This is a major financial decision, and it is important to evaluate the benefits and drawbacks of each option. The majority of home loans fall into two categories. The first is called a conforming loan and the second is called a jumbo loan. There are a few significant differences between them.

How Is The Size Of A Home Loan Determined?

First, it is important to understand how the size of a home loan is determined. Homebuyers usually need to put money down before they will be granted a home loan. First-time homeowners may be able to qualify for a home loan with only 3.5 percent down, but most people will be asked to put 20 percent down. Otherwise, they could be asked to purchase private mortgage insurance. The remaining balance of the sale is the size of the loan financed by the lender. 

What Is A Conforming Loan?

A conforming loan is any loan that is beneath the federally set limit. Typically, a conforming loan comes with a lower interest rate than a jumbo loan. Therefore, home buyers who have a proposed loan amount at or near the federal limit, or those who have flexibility in the size of the down payment, are better off securing a conforming loan so they can save money. 

What Is A Jumbo Loan?

A jumbo loan is any loan that is above the federally set limit. While a jumbo loan can still allow homeowners to secure a house, it usually comes with higher interest rates. Before taking out a jumbo loan, potential homebuyers need to talk to the loan officer about their other options. There might be ways to avoid taking out a jumbo loan. 

Work With A Professional Loan Officer

Anyone interested in taking out a home loan has to work with a professional loan officer who can explain the different options available. In addition to deciding on a fixed-rate versus an adjustable-rate mortgage, applicants need to figure out if they qualify for a conforming loan or a jumbo loan. The differences between these two loans can equate to thousands of dollars over the life of the loan. 

 

Filed Under: Mortgage Tagged With: Conforming Loan, Jumbo Loan, Mortgage

Our Team


Kay MonigoldKay Monigold
Owner/Mortgage Broker/Residential Mortgage Loan Originator

NMLS#1086176
 
ron martinRon Martin
Residential Mortgage Loan Originator

NMLS#316821

Steven
Steven P Lowe, Sr
Residential Mortgage Loan Originator

NMLS #1085638
GET A RATE QUOTE →
Download Our Mobile App! →

Connect with Me!

Let’s Keep In Touch!

  • This field is for validation purposes and should be left unchanged.

Browse Articles by Category

Accessibility Statement

We are committed to ensuring that its website is accessible to people with disabilities. All the pages on our website will meet W3C WAI's Web Content Accessibility Guidelines 2.0, Level A conformance. Website Accessibility Policy
nmlsconsumeraccess.org
Equal Housing Lender

Quick Links

  • Privacy Policy
  • Get a Rate Quote!
  • Accessibility Statement
  • Texas Complaint and Recovery Fund Notice

Copyright © 2023 · Powered by MySMARTblog