Conforming Mortgages

Conforming MortgagesThe first thing people think about when they think conforming mortgages is the loan amount.

But there are many other criteria that make a loan conforming or not.

For condos, the percentage of income that goes into the reserves account, the percentage of units in the association that are owner-occupied, whether the association allows daily rentals, whether the association is involved in law suits other than foreclosures, and many, many more.

For 2-4 units, whether there is commercial space in the building.

There are requirements for borrower’s employment, for borrower’s funds, for borrower’s credit scores and history.

All requirements Freddie Mae and Freddie Mac are meant to reduce the risk on the lender.  Freddie and Fannie do not want a lot of risk.

So, basically, conforming means less risky, non-conforming means riskier.