Conforming Mortgage Loans
These loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community.
Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.
Fannie Mae also offers HomeReady low-down payment financing with reduced rates and PMI only requiring 3% down. Freddie Mac also offers a Home Possible program with similar features. You can check details of these affordable programs HERE