What is a Super-Conforming Mortgage?

In Mortgages, Non-QM
December 23, 2024
Philip Perry
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The Super-Conforming Mortgage Since 2020, residential real estate has been a hot commodity with stratospheric appreciation driven by record-low interest rates and a lack of inventory. The high inflation and interest rate hikes that followed brought some markets back to Earth. There are many desirable areas of the country where real estate values have remained

The Super-Conforming Mortgage

Since 2020, residential real estate has been a hot commodity with stratospheric appreciation driven by record-low interest rates and a lack of inventory. The high inflation and interest rate hikes that followed brought some markets back to Earth. There are many desirable areas of the country where real estate values have remained stubbornly high and are unlikely to correct below conforming limits.

The Federal Housing Finance Agency (FHFA) meets annually to evaluate the market and establish revised loan limits as needed. Even with increased limits, many buyers are still priced out of a conforming loan. Non-QM Jumbo and Super Jumbo loans are excellent options for transactions that exceed conforming limits. These loans also come with the benefit of higher loan amounts that can exceed 4 million dollars. Another benefit, particularly for self-employed, makes it possible to qualify with limited documentation such as 12- to 24-month bank statements only.

Freddie Mac has introduced super-conforming mortgages, which are designed to accommodate higher maximum loan limits for properties located in designated high-cost areas. These enhanced loan limits, as determined by the Federal Housing Finance Agency (FHFA), aim to provide lenders with essential liquidity in the nation’s most expensive regions. This initiative also seeks to reduce mortgage financing costs for borrowers in these high-cost areas.

The maximum loan amounts for super-conforming mortgages vary by county and property type:

SFR/Condo: $1,089,300
2-Unit Property: $1,394,775
3-Unit Property: $1,685,850
4-Unit Property: $2,095,200

Super-conforming mortgages typically offer the same terms and features as conforming mortgages, including competitive interest rates, fixed-rate options, and down payments of 5 to 10% of the home’s purchase price. As with any home loan, borrowers must meet the lender’s eligibility criteria, including credit score, debt-to-income ratio, and other factors. It should also be noted that while this may help some, Non-QM is still the best option in areas where the average sale price exceeds super-conforming limits.

Learn more about: Jumbo and Super Jumbo Loans