Loan
High Balance Loans
Looking for an affordable option in a high-cost area? Our high balance mortgage loans may be the solution you’re looking for.
Benefits of a high balance home loan
- Competitive interest rates
- Loan amounts exceeding national conforming loan limits for properties in designated high-cost areas
- Primary residence, second/vacation home, and investment property options
- Condo financing available
- Lower minimum credit score and higher maximum debt-to-income ratio requirements than jumbo loans
What is a high balance loan?
A high balance loan, also known as a conforming high-balance or super-conforming loan, is given to home buyers in high-income areas. A high balance loan typically exceeds the national baseline conforming loan limits but falls within local limits for the high-cost country you’re buying in.
High balance vs. jumbo loans
While high balance loans and jumbo loans might seem similar at first glance, there are several significant differences. First, while jumbo loans are available across the country, high balance loans are only available in FHFA-designated high-cost counties.
Additionally, because high balance loans are considered conforming loans, they can be purchased by Fannie Mae and Freddie Mac. This makes them a lower-risk loan for lenders. But because they are conforming mortgages, lenders that issue high-balance loans must adhere to FHFA eligibility guidelines. In other words, there’s less variability in eligibility requirements.
Jumbo loan lenders are free to set their own eligibility requirements, and lending terms can vary widely as a result. Jumbo loan applicants should be in a high-income earning bracket and have a credit score of 700 or more. Jumbo loan interest rates and down payments are typically higher than conforming loans, and requirements are stricter, making it more challenging to qualify for.
High Balance Loans
Looking for an affordable option in a high-cost area? Our high balance mortgage loans may be the solution you’re looking for.
What is a high balance loan?
A high balance loan, also known as a conforming high-balance or super-conforming loan, is given to home buyers in high-income areas. A high balance loan typically exceeds the national baseline conforming loan limits but falls within local limits for the high-cost country you’re buying in.
High balance vs. jumbo loans
While high balance loans and jumbo loans might seem similar at first glance, there are several significant differences. First, while jumbo loans are available across the country, high balance loans are only available in FHFA-designated high-cost counties.
Additionally, because high balance loans are considered conforming loans, they can be purchased by Fannie Mae and Freddie Mac. This makes them a lower-risk loan for lenders. But because they are conforming mortgages, lenders that issue high-balance loans must adhere to FHFA eligibility guidelines. In other words, there’s less variability in eligibility requirements.
Jumbo loan lenders are free to set their own eligibility requirements, and lending terms can vary widely as a result. Jumbo loan applicants should be in a high-income earning bracket and have a credit score of 700 or more. Jumbo loan interest rates and down payments are typically higher than conforming loans, and requirements are stricter, making it more challenging to qualify for.
Benefits of a high balance home loan
- Competitive interest rates
- Loan amounts exceeding national conforming loan limits for properties in designated high-cost areas
- Primary residence, second/vacation home, and investment property options
- Condo financing available
- Lower minimum credit score and higher maximum debt-to-income ratio requirements than jumbo loans
Is a high balance loan right for you?
If you’re looking at a property in an FHFA-designated high-cost county, a high-balance loan is easier to qualify for than a non-conforming jumbo loan. Long story short: high balance or super conforming loans offer those interested in living in a high-cost area the opportunity for more affordable financing.
Other things to think about when considering a conventional loan:
- The down payment requirement for a conventional loan tends to vary based on your financial situation and whether this is your first home.
- Putting less than 20% down on a home with a conventional loan means you’ll likely have to pay private mortgage insurance as part of your mortgage payment.
- Individuals who have filed for bankruptcy or had a foreclosure within the past seven years may not qualify for a conventional loan.
Explore Your Home Lending Options With Local Experts
If you’ve got your heart set on a high-priced property but aren’t sure whether a high balance loan or jumbo loan will serve you better, get in touch! The team at Hixon is here to help you understand the pros and cons of each and how they support your personal goals.
