A super conforming loan is a type of mortgage loan that falls between the limits of a conforming loan and a jumbo loan. Here's what each of these terms means:
Conforming Loan: A conforming loan is a mortgage loan that meets the guidelines set by Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that buy and sell mortgages on the secondary market. These guidelines typically include limits on the loan amount, borrower's credit score, debt-to-income ratio, and other factors. In most areas of the United States, the conforming loan limit is set annually by the Federal Housing Finance Agency (FHFA). As of 2022, the conforming loan limit for most areas is $647,200, but it can be higher in high-cost areas.
Jumbo Loan: A jumbo loan is a mortgage loan that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. Because these loans are larger than the limits set by the GSEs, they often have stricter underwriting requirements and higher interest rates.
A super conforming loan, sometimes referred to as a "high-balance" conforming loan, is designed to bridge the gap between conforming loans and jumbo loans. These loans allow borrowers in high-cost areas to borrow more than the standard conforming loan limit while still qualifying for conforming loan terms and interest rates. Super conforming loans typically have higher loan limits than standard conforming loans but are still considered conforming loans because they adhere to the guidelines set by Fannie Mae and Freddie Mac.
Super conforming loan limits vary by location and are set at a percentage above the standard conforming loan limit. Borrowers should check with their lenders or mortgage brokers to determine the super conforming loan limits in their area.
In summary, a super conforming loan is a mortgage loan that exceeds the standard conforming loan limit but still adheres to the guidelines set by Fannie Mae and Freddie Mac, allowing borrowers in high-cost areas to access larger loan amounts while benefiting from conforming loan terms and interest rates.