Loan Catergories
Loan Categories The major loan categories are conventional and
government. Conventional loans can be further categorized into
conforming and non-conforming. Government loans primarily refer
to FHA and VA loans.
Conforming Loans A conforming loan adheres to the guidelines
established by Fannie Mae or Freddie Mac. These guidelines
establish maximum loan amounts, down payment, credit and income
requirements and acceptable property types. Lenders that make
loans according to these guidelines may sell them to Fannie Mae
or Freddie Mac. Conforming loans make up the majority of loans
in the U.S.
Non-conforming Loans Loans that do not conform to the guidelines
established by Fannie Mae or Freddie Mac are called
non-conforming loans. A loan that is larger than the conforming
loan limit is called a Jumbo loan. Loans that do not meet the
credit quality of conforming loans ('A' paper) are referred to
ad A- through 'D' paper loans, or subprime loans.
Government Loans FHA and VA loans are the two most popular types
of Government loans. Government loans have different loan limits
and qualifying criteria compared to conventional loans.
Portfolio Loans Loans may be sold on the secondary market to
Fannie Mae, Freddie Mac or a select number of conduits (e.g. GE
Capital) or they may be kept in the bank's portfolio. Portfolio
loans generally have more flexible qualifying criteria, while
saleable loans must meet more strict criteria.
Commercial Loans Loan programs discussed above apply to one-
through four-family, residential properties. Loans on
residential properties containing five or more units, office
buildings, warehouses and other commercial properties are
considered commercial loans.
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M & M Resources Unlimited, Inc.
Helping customers since 1986
1577 Ridge Road West, Suite 119 - Rochester, NY 14615 Office:
(585) 865-0950 Fax: (585) 865-3202 Toll Free: 1-800-937-2350
Licensed Mortgage Banker/NYS Banking Department