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CLICK HERE TO GET STARTED🏡 Understanding Fannie Mae and Freddie Mac Conventional Loans
Welcome to Cap One Lending’s Guide to Conventional Loans—your trusted resource for navigating the most common type of home financing in the U.S. Whether you're a first-time homebuyer, upgrading to your dream home, or refinancing to a better rate, understanding how Fannie Mae and Freddie Mac loans work can help you make confident, informed decisions.
💡 What Is a Conventional Loan?
A conventional loan, also known as a conforming loan, is a mortgage that meets the underwriting standards set by Fannie Mae and Freddie Mac, the two largest government-sponsored enterprises (GSEs). These loans are not backed by the federal government—unlike FHA, VA, or USDA loans—which allows for greater flexibility in terms, property types, and loan structures.
✅ Benefits of Conventional Loans
- Competitive Interest Rates – Typically lower for well-qualified borrowers
- Low Down Payment Options – As little as 3% down for first-time buyers
- No Upfront Mortgage Insurance – Unlike FHA loans, there's no UFMIP
- Broad Property Eligibility – Financing for single-family homes, condos, townhomes, and 2–4 unit properties
- Appraisal Waivers Available – Streamlined process for eligible borrowers
- Custom Loan Terms – Choose fixed rates (8–30 years) or adjustable-rate mortgages (ARMs)
Bonus: You can remove private mortgage insurance (PMI) once your equity reaches 20%—unlike FHA, which often requires life-of-loan coverage.
📈 2025 Conventional Loan Limits
Conventional loan limits vary by county and property type. Here are the latest conforming loan limits for 2025:
| Units | Low-Cost Area | High-Cost Area |
|---|---|---|
| 1 | $806,500 | $1,209,750 |
| 2 | $1,032,650 | $1,548,975 |
| 3 | $1,248,150 | $1,872,225 |
| 4 | $1,551,250 | $2,326,875 |
Cap One Lending can help determine the loan limit in your specific area.
📋 Key Guidelines for Fannie Mae & Freddie Mac Loans
- Down Payment:
- As low as 3% for first-time homebuyers
- Up to 97% financing available for rate-and-term refinances
- Credit Score Requirements:
- Minimum 620 median FICO
- Higher scores qualify for better pricing and reduced MI
- Debt-to-Income Ratio (DTI):
- Standard max 45%, with possible exceptions up to 50% with compensating factors
- Mortgage Insurance (MI):
- Required when loan-to-value (LTV) exceeds 80%
- Choose from borrower-paid (monthly or upfront) or lender-paid options
- Occupancy Types Allowed:
- Primary residences
- Second homes
- Investment properties
🔍 Helpful Resources
- Fannie Mae Single-Family Selling Guide
- Freddie Mac Single-Family Seller/Servicer Guide
- Fannie Mae Area Median Income (AMI) Lookup Tool
🛠️ How to Get Started with Cap One Lending
1. Speak with a Mortgage Expert
Discuss your goals with a Cap One Lending specialist to find the best loan for your situation.
2. Gather Your Documents
Prepare income statements, bank statements, credit info, and property details to ensure a smooth approval process.
3. Choose Your Loan Type
Explore fixed or adjustable-rate options, and decide what’s best for your budget and timeline.
4. Stay Informed
We’ll keep you updated on loan program updates, rate changes, and GSE guidelines so you can stay ahead of the curve.
📞 Let’s Make Homeownership Happen
At Cap One Lending, we combine expertise, speed, and personalized service to help you secure the best possible loan terms. Whether you're buying or refinancing, our team is here to guide you from pre-approval to closing—and beyond.
📲 Call us at 816-905-1111
🌐 APPLY HERE to get started today
Cap One Lending – Helping you finance smarter, live better, and grow faster.