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Types of Loans

 

 

Conventional Home Loans:

Any mortgage loan other than an FHA, VA or an USDA loan is conventional one.

Conforming Loans

Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for Americans.

Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year.

The national conforming loan limit for Fannie Mae or Freddie Mac backed mortgages for single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Since early 2008, a series of legislative acts have temporarily increased the one-unit limit to up to $729,750 in certain high-cost areas in the contiguous United States. Permanent limits, which apply to the Enterprises' acquisitions of certain mortgages originated prior to July 1, 2007, are set under the terms of the Housing and Economic Recovery Act of 2008 (HERA).

The 2017 conforming loan limits for first mortgages are as follows:

One-family:

$424,000

Two-family:

$533,850

Three-family:

$645,300

Four-family:

$801,950

 

   

Jumbo Loans -  (Non-Conforming)

Loans above the maximum loan amount established by Fannie Mae and Freddie Mac are known as 'jumbo' loans. Because jumbo loans are bought and sold on a much smaller scale, they often have a little higher interest rate than conforming, but the spread between the two varies with the economy.

FHA Home Loans:

The Federal Housing Administration (FHA), which is part of the U.S. Dept. of Housing and Urban Development (HUD), administers various mortgage loan programs. FHA loans have lower down payment requirements (minimum of 3.5%) and are easier to qualify than conventional loans. FHA loans cannot exceed the statutory limit.   To find the FHA loan limit in your area, go to the following link.    http://www.fha.com/lending_limits_state.cfm?state=MICHIGAN

VA Home Loans: 

VA loans are guaranteed by U.S. Dept. of Veterans Affairs. The guaranty allows veterans and service persons to obtain home loans with favorable loan terms, usually without a down payment. In addition, it is easier to qualify for a VA loan than a conventional loan.

The VA loan limit is $417,000 for all counties in Michigan. 

The U.S. Department of Veterans Affairs does not make loans, it guarantees loans made by lenders. VA determines your eligibility and, if you are qualified, VA will issue you a certificate of eligibility to be used in applying for a VA loan.   VA mortgages do not require a down payment and have no mortgage insurance (PMI) and have competitive rates. They require a VA Funding fee which is financed into the mortgage.  The funding fee is as follows, 2.15% of the loan amount for first time users or 3.3% of the loan amount for subsequent users.

http://www.benefits.va.gov/homeloans/docs/history.pdf

USDA Home Loans:  

 Rural Development loan (RD)

The US Department of Agriculture (USDA) is offering and promorting loans in rural areas of the state (see the USDA Eligibility Map to see if a home is eligible).

This does not mean you have to buy a Farm.  It means that you have an opportunity to own a home with Zero down payment and minimal mortgage insurance and live outside of major city limits.

Once again, NO DOWN PAYMENT and Minimal PMI (private mortgage insurnace) to qualified buyers.

This is a great opportinity for any buyer who is looking to move away from the city and into the country.   See me for more details!

For more information, go to the following link:

http://www.rurdev.usda.gov/HSF-About_Guaranteed_Loans.html

 
Derek Neher NMLS License # 135746, Executive Vice President NMLS #135746
Towne Mortgage Company dba Great Lakes Mortgage Funding
49857 Grand River Ave. Ste A, Wixom, MI  48393
Direct:  (734) 422-5200 Ext. 7681
Cell:  (810) 533-2342
Fax:  (734) 943-6213
derek@glmf.com
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(a division of Towne Mortgage Co.)
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