Orange County Home Buyer Resources
There are several types of mortgage loans available and you may be familiar with some of these terms:
Conventional Loans (also known as a Conforming loan)
A Conventional loan is a mortgage loan that typically has a traditional, fixed-rate structure. Theses loans are not insured by federal agencies, like the FHA or the VA. A conventional loan is sometimes referred to as a "conforming loan", which is a mortgage that is eligible for resale to Fannie Mae and Freddie Mac. The current conforming limit for loans in Orange County, CA is $625,000. This is an increase from the original ceiling of $417,000.Loans above $625,000 in Orange County are called "jumbo" loans. There are many conforming loan programs including 15 and 30 year fixed loans as well as a number of adjustable loan options.
An FHA loan is a loan that is insured by the Federal Government, thereby limiting the lender's risk. The borrower pays an insurance premium upfront which is approx 1.75% of the loan total. This can be financed directly in the loan amount. The borrower is also required to pay a monthly premium of .55% of the loan amount divided by 12 months. An FHA loan requires a down payment of 3.5%. This money can be a gift, and no reserves are required. FHA loan interest rates are competitive with conventional loan rates, and FHA loans are easier to qualify for than similar conventional loans. FHA loan limits in Orange County are for loan amounts up to $729,500. FHA loans are discussed in detail on one of my following web pages
Jumbo loans are loans that exceed the conventional loan limit of $625,000. These loans are usually acquired for higher end, or "luxury" properties. Jumbo mortgage loans are a higher risk for lenders. This is because if a jumbo mortgage loan defaults, it is harder to sell a luxury residence quickly for full price. Luxury prices are more vulnerable to market highs and lows. That is one reason lenders prefer to have a higher down payment from jumbo loan seekers. Jumbo home prices can be more subjective and not as easily sold to a mainstream borrower, therefore many lenders may require two appraisals on a jumbo mortgage loan. The interest rate charged on jumbo mortgage loans is generally higher than a loan that is conforming, due to the slightly higher risk to the lender.
Estimating your monthly mortgage payments