High Balance Loans

A high-balance loan is one that exceeds the national baseline conforming loan limits, but falls within the local conforming loan limits for your high-cost county.  High-balance loans are considered conforming loans with respect to Fannie Mae and Freddie Mac (Freddie Mac refers to them as “super-conforming loans”). Lending requirements for conforming loans include:

• You must have a credit score of at least 620 depending on your down payment size and cash reserves.

• You must make a down payment of at least 5% of the home’s appraised market value.

• Your debt-to-income (DTI) ratio — the percentage of your monthly pretax income required to cover the mortgage payment and other debts — cannot exceed 45%.

Qualifying for a high-balance loan from Fannie Mae comes with a couple of extra stipulations that don’t apply to standard conforming loans:

• All loan applicants must have credit scores. Standard conforming loans allow for a process known as manual underwriting, which evaluates an applicant’s creditworthiness even if they lack credit reports needed to obtain a credit score. Fannie Mae uses an automated system that requires all high-balance loan applicants to have credit scores.

• High-balance loan borrowers don’t have access to Fannie Mae’s 3% down-payment loans.