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Conventional Conforming Loans in California

Conforming loans tend to have the best loan terms and the best interest rates, resulting in a lower monthly payment. However, the standards are a bit higher for who qualifies. If you have strong credit and a low debt-to-income, then you may benefit from a conventional conforming coventional loan.

Conforming loans are the most common type of mortgage. If you have a strong credit score and a loan amount within the conforming loan limits, there’s a good chance you'll use a conforming loan.

What is a conforming loan?

Conforming loans are conventional mortgages that meet the requirements to be purchased by Fannie Mae or Freddie Mac. These loans are not backed or insured by a government entity, unlike government-backed loans such as FHA, VA, and USDA loans.  
 
Conforming loans are frequently confused with conventional loans, but there is a difference:
  • A conventional loan is any mortgage that doesn’t provide a government guarantee to compensate the lender if the borrower defaults.

  • A conforming loan is a type of conventional loan.

A conforming loan follows Fannie Mae and Freddie Mac’s guidelines for residential mortgages. Borrowers must have a:
  • Minimum Down Payment for First Time Homebuyers =  3%

  • Minimum Down Payment for All Homebuyers = 5%

  • Debt-to-income (DTI) ratio no higher than 45-50%

  • Credit score of at least 620

Conforming loans must also stick within the conforming loan limits set each year by the FHFA. For 2024, the baseline loan limit is  $766,550 for a single-family home.

The Federal Housing Finance Agency (FHFA) sets the loan limits for conforming loans each year based on housing prices. Fannie and Freddie can’t buy home loans that exceed these limits. In some high-cost markets, such as Ventura County, Los Angeles County, Orange County, and San Diego County, the limit is higher. Check below for loan limits in your county in California.

What are the benefits of a conforming loan?

Conforming loans have several advantages:
1. Lower Interest Rates
  • Conforming loans typically offer lower interest rates to borrowers with high credit scores, making them a great option if your goal is to get a low monthly payment. 

2. Ability to Shop Around
  • Conforming loans are offered by many different lenders, giving you the opportunity to compare services and prices.

3. Consumer Protection Guidelines
  • Conforming loans have standardized guidelines meant to protect the borrower and ensure their ability to repay the loan. Lenders can no longer offer mortgages without proper verification of income, assets and credit history.

4. PMI Mortgage Insurance Removal

  • If you make a down payment of more than 20%, you don’t have to pay for mortgage insurance at all on a conventional loan. If you do end up paying for mortgage insurance, you can request removal once you reach 20%-22% equity in the home.

5. Occupancy Flexibility
  • Conventional loans are the only ones you can use to buy a vacation home. Additionally, conforming loans are the only ones you can use to buy a non-owner-occupied residential investment property. Down payments and interest rates are slightly higher for second homes and rental properties, but it’s an option.

What are the requirements to qualify for a conforming loan?

To qualify for a conforming loan, you'll need a:
  • 620+ credit score
  • <50% debt-to-income (DTI)
  • 3-5% down payment
  • Stable record of employment and income going back at least 2 years
  • Loan amount below conforming loan limit

What is the 2024 conforming loan limit where I live?

The 2024 conforming loan limit is $766,550 for a 1-unit property in most places. In California, these are the high-balance counties that allow for a higher limit:

ALAMEDA COUNTY LOAN LIMIT: 

$1,149,825

CONTRA COSTA COUNTY LOAN LIMIT: 

$1,149,825

LOS ANGELES COUNTY LOAN LIMIT: 

$1,149,825

MARIN COUNTY LOAN LIMIT: 

$1,149,825

MONTEREY COUNTY LOAN LIMIT: 

$920,000

NAPA COUNTY LOAN LIMIT: 

$1,017,750

ORANGE COUNTY LOAN LIMIT: 

$1,149,825

SAN BENITO COUNTY LOAN LIMIT: 

$1,149,825

SAN BERNARDINO COUNTY LOAN LIMIT: 

$1,006,250

SAN DIEGO COUNTY LOAN LIMIT: 

$1,006,250

SAN FRANCISCO COUNTY LOAN LIMIT: 

$1,149,825

SAN LUIS OBISPO COUNTY LOAN LIMIT: 

$929,200

SAN MATEO COUNTY LOAN LIMIT: 

$1,149,825

SANTA BARBARA COUNTY LOAN LIMIT: 

$838,350

SANTA CLARA COUNTY LOAN LIMIT: 

$1,149,825

SANTA CRUZ COUNTY LOAN LIMIT: 

$1,149,825

SONOMA COUNTY LOAN LIMIT: 

$877,450

VENTURA COUNTY LOAN LIMIT: 

$954,500

Is a conforming loan right for you?

Conforming loans can be a great choice for aspiring homebuyers with good credit who are looking for moderate-value homes. If you’re shopping for a home loan, you can reach out to Castle Funding to receive a quote and explore your loan options. It’s simple, free, and only takes a few minutes.

Know exactly what to expect from your home loan.

Get a free loan quote and leave the guesswork behind.

It all starts with a conversation.  No commitment.    No hidden costs. 

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