Conventional Loans
Conforming Mortgage
A conforming loan is a mortgage loan that adheres to the guidelines set by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. These guidelines include criteria like loan size limits, borrower credit requirements, and other underwriting standards. Conforming loans are typically considered lower-risk by lenders because they meet the criteria established by these entities, making them easier to sell in the secondary mortgage market.
Key features of conforming loans include:
Loan Limits: Conforming loans must meet specific loan size limits, which are set annually by the Federal Housing Finance Agency (FHFA). These limits vary by geographic location, taking into account differences in home prices. In areas with higher housing costs, the loan limits are higher.
Credit Standards: Conforming loans often have credit score requirements that borrowers must meet. Borrowers with higher credit scores may qualify for more favorable terms.
Down Payment: The down payment requirements for conforming loans can vary, but they are typically more flexible compared to certain government-backed loans. While a down payment of 20% or more can help avoid private mortgage insurance (PMI), conforming loans may allow for down payments as low as 3%.
Fixed or Adjustable Rates: Conforming loans can offer both fixed-rate and adjustable-rate mortgage options. With a fixed-rate mortgage, the interest rate remains constant throughout the loan term. With an adjustable-rate mortgage (ARM), the interest rate may change periodically based on market conditions.
It's worth noting that loans that exceed the conforming loan limits are often referred to as "jumbo loans." Jumbo loans typically have different qualification requirements and may have higher interest rates because they are considered higher risk due to their larger loan amounts.
Conforming loans are widely used for home purchases and refinances, and their adherence to standard guidelines makes them more accessible and standardized in the mortgage market.
High Balance Mortgage
A high-balance loan, also known as a high-balance mortgage, is a type of mortgage loan that exceeds the conforming loan limits set by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac. In the United States, the Federal Housing Finance Agency (FHFA) sets these conforming loan limits based on the median home prices in different areas.
When a mortgage loan amount exceeds the conforming loan limits but is still within a certain higher threshold set by the FHFA, it is considered a high-balance loan. High-balance loans are often used in areas with higher housing costs where the standard conforming loan limits may not be sufficient to cover the purchase or refinancing of more expensive homes.
Key features of high-balance loans include:
Loan Amounts: High-balance loans have loan amounts that exceed the standard conforming loan limits, but they are below a specific higher threshold set by the FHFA.
Credit Standards: Borrowers seeking high-balance loans typically need to meet stricter credit and income requirements compared to conforming loans. Lenders may impose additional qualification criteria due to the larger loan amounts involved.
Interest Rates: Interest rates for high-balance loans may be slightly higher than those for conforming loans. This is because lenders perceive higher risks associated with larger loan amounts.
Down Payment: High-balance loans may have different down payment requirements compared to conforming loans. Borrowers may need a larger down payment to qualify for a high-balance loan.
It's important to note that high-balance loans are not the same as jumbo loans. Jumbo loans are for amounts that exceed the high-balance loan limits, and they typically have different qualification criteria and may come with higher interest rates.
The specific loan limits for high-balance loans can vary by location, depending on the housing market conditions in a particular area. Borrowers interested in high-balance loans should check the current loan limits set by the FHFA for their region.
Buy Downs
Buy Down
A mortgage buydown is a financing technique where the borrower or a third party pays an additional upfront fee to the lender to reduce the initial interest rate on a mortgage. The purpose of a mortgage buydown is typically to make the monthly mortgage payments more affordable for the borrower, especially in the early years of the loan.
There are two common types of mortgage buydowns:
Temporary Buydown (Temporary Interest Rate Buydown): In a temporary buydown, the borrower or a third party pays an upfront fee to reduce the interest rate for a specified initial period, often the first one to three years of the loan. This can result in lower monthly payments during the initial period, making it more manageable for the borrower. After the specified period, the interest rate and monthly payments typically revert to the original terms outlined in the mortgage agreement.
Permanent Buydown (Permanent Interest Rate Buydown): In a permanent buydown, the upfront fee is paid to permanently lower the interest rate over the entire term of the loan. This results in lower monthly payments throughout the life of the mortgage.
The upfront fee paid in a mortgage buydown is often expressed as points. One point is equal to 1% of the loan amount. For example, if a borrower pays two points on a $200,000 mortgage, they are paying an upfront fee of $4,000.
It's essential for borrowers to carefully evaluate whether a mortgage buydown makes financial sense for their situation. While it can provide short-term relief with lower initial payments, borrowers need to consider how long they plan to stay in the home and whether the upfront cost of the buydown is justified by the potential savings in monthly payments over time.
Mortgage buydowns are just one of many options available to borrowers to customize their mortgage terms. It's advisable to consult with a mortgage professional to fully understand the implications and costs associated with a mortgage buydown in the context of one's overall financial goals.
How to get an 850 Credit Score
A flawless 850 FICO® score unlocks the lowest interest rates, elite credit card offers, and top-tier negotiating power on loans. At BlueWater Credit, we’ve guided thousands to exceptional scores. Follow this step-by-step roadmap to elevate your credit profile and lean on our experts whenever you need help.
1. Assess Your Starting Line: Pull Your Credit Reports
Start with a clear picture of your credit history. Order your free reports from Experian, Equifax, and TransUnion at AnnualCreditReport.com. For full FICO® score monitoring, you can also check your scores through this MyScoreIQ link.
Review your reports for:
- Accounts you don’t recognize (possible fraud)
- Late payments or delinquencies
- Recent hard inquiries
- Public records like liens or bankruptcies
Keep copies of each report so you can track progress and catch any surprises early.
2. Build an Unbreakable On-Time Payment Streak
Your payment history makes up 35% of your score—the single most important factor. To keep it spotless:
- Automate all bills, from mortgage to utilities
- Set reminders at least two days before due dates
- Maintain a buffer in your bank account to avoid accidentally missing payments
A consistent record of on-time payments signals that you’re a low-risk borrower.
3. Crush Credit Utilization: Keep Balances Low
Credit utilization makes up 30% of your score. Aim to keep balances under 10% of your credit limits:
- Make multiple payments throughout the month
- Request credit limit increases periodically (but don’t spend more)
- Spread purchases across cards to avoid any single high balance
Low utilization shows lenders you use credit wisely—not excessively.
4. Cultivate a Healthy Credit Mix
Your credit mix accounts for 10% of your score. A balanced profile may include:
- Revolving credit (credit cards, lines of credit)
- Installment loans (auto, mortgage, student)
- Secured cards or retail accounts
Only open new accounts when they serve a purpose—too many new accounts can hurt more than help. If you’re looking to diversify your mix, explore current credit card offers here.
5. Preserve Account Age: Honor Your Oldest Accounts
Length of credit history makes up 15% of your score. Here’s how to maximize it:
- Keep old accounts open, even if unused
- Downgrade fee-based cards instead of closing them
- Avoid opening too many new accounts at once
Long-standing credit relationships show stability and reliability.
6. Minimize Hard Inquiries When Applying
Hard pulls can temporarily lower your score. Reduce their impact by:
- Bundling mortgage or auto loan rate-shopping into a 14-day window (FICO treats them as one)
- Using prequalification tools that rely on soft inquiries
Strategic planning keeps your credit momentum strong.
7. Monitor Regularly & Dispute Issues with BlueWater Credit
Even a small error can hold back your score. Stay proactive by:
- Signing up for credit monitoring to catch new accounts, inquiries, or delinquencies
- Contacting BlueWater Credit immediately if you spot anything inaccurate or suspicious
Our experts will handle disputes with the bureaus so you can stay focused on your goals.
8. Use Credit-Builder Tools Wisely
If you’re building or repairing credit, the right tools can speed up progress:
- Secured credit cards (backed by a deposit, but report like regular cards)
- Credit-builder loans (payments are held in savings and reported monthly)
- Authorized user status on a trusted person’s account
Use these products strategically and manage them responsibly to build trust with lenders.
9. Make 850 a Lifestyle, Not Just a Goal
Achieving a perfect score is impressive—but maintaining it is where the real power lies. Stick with your good habits: make on-time payments, keep utilization low, monitor your reports, and stay informed.
Barrett Financial Group, LLC NMLS #181106
© 2024 All Rights Reserved. Kurt Kessler NMLS# 365130 | Barrett Financial Group, L.L.C. | NMLS #181106 | 3207 Grey Hawk Court, Suite 110, Carlsbad, CA 92010 | CA 60DBO-46052 & 41DBO-148702 Licensed by Dept. of Financial Protection & Innovation under the California Residential Mortgage Lending Act. Loans made or arranged pursuant to a California Financing Law License | Equal Housing Opportunity | This is not a commitment to lend. All loans are subject to credit approval. nmlsconsumeraccess.org/EntityDetails.aspx/COMPANY/181106 -NMLS Consumer Access /Legal Disclaimer - This information is not intended to be an indication of loan qualification, loan approval or commitment to lend. Other limitations may apply. This site is not authorized by the New York State Department of Financial Services. No mortgage loan applications for properties located in the state of New York will be accepted through this site.