New higher conforming loan limits (See New Conforming loan limits post) created by temporary federal legislation have resulted in a new type of loan: The conforming-jumbo loan. Strange as it may be to say those two words together, the conforming-jumbo loan amount is above the previous conforming loan limit, but less than or equal to the temporary limit which will last until at least the end of this year.
The conforming-jumbo is being treated differently than the previous conforming or jumbo loans. Fannie Mae and Freddie Mac add on a .25 percent rate adjustment for conforming-jumbo loans, and they require a minimum credit score of 660 to qualify. There are other requirements, and if you are interested, you should read this post from Rain City Guide.
It is important to note that those are only the standard adjustments from Freddie and Fannie, and each individual lender then decides whether they should make additional ones. One loan officer commented on a Rain City Guide post that Plaza (a mortgage lender) is adding a 2.5 price hit on FHA loans above the previous conforming limit. Many other loan officers suspect that several other lenders will be making similar adjustments, although it is not certain that they will be as extreme.
In order for the new loan limits to work, they need to be an available and sensible option. If they turn out to be just as difficult and/or expensive as jumbo loans, then this all will become a big waste of time. It doesn’t seem that this will be entirely the case; they should help high-cost markets somewhat, and they won’t be as bad as jumbo loans, but it does seem that these loans will be more expensive and of less help than many people anticipated.
Conforming also has new "hits" to rates based on credit scores under 720 and loan to values.
Conforming-Jumbo has "hits" around 2% to fee as well.
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