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What is a Super Conforming Loan and How Does It Work?

TLDR

What You Need To Know

  • For a super conforming loan, the borrowing limit can be as high as 150% of the $647,200 national conforming loan limit or $970,800[1]
  • There are some areas where real estate prices are simply higher than the national average. In these high-cost areas, you can take out a super conforming loan
  • Qualifying for a super conforming loan is essentially the same as qualifying for a regular conforming mortgage loan

Contents

The average U.S. mortgage loan is currently $305,000.[2] That’s less than half of the conventional or conforming loan limit of $647,000 set by the Federal Housing Finance Agency (FHFA).[1] But some home buyers will need to borrow more than the limit if they want to purchase a home. 

In the majority of U.S. counties, exceeding the loan limit means you’ll need to take out a jumbo loan or non-conforming loan. Unfortunately, jumbo loan interest rates and down payments are often higher than conforming mortgage rates.

Have no fear. You may be able to borrow more money with a super conforming loan or super conforming mortgage.

A super conforming loan doesn’t give you or your house super-strength or the power to fly. But in some areas where property values are higher than the national average, a super conforming loan can help you buy a home without having to pay more for a jumbo loan.

Is a super conforming loan the answer to your domicile dilemma? Fear not true believers, we have the answers you need.

What Is a Super Conforming Loan?

Before we talk about a super conforming loan, it’s important to understand what a conforming or conventional loan is and why it’s important.

A conforming loan is a mortgage loan that conforms to the standards set by Fannie Mae and Freddie Mac. These standards include a minimum credit score and debt-to-income (DTI) ratio that the borrower must meet. 

More importantly, they set limits on the amount you can borrow. These limits are based on median U.S. home prices and are set by the Federal Housing Finance Agency (FHFA). As of 2022, the conforming limit is currently $647,200 for a single-family home.[1]

That doesn’t mean you can’t buy a more expensive home; it just means you can’t borrow more than the limit.

Conforming vs. super conforming

However, there are some areas where real estate prices are simply higher than the national average. In these high-cost areas, the FHFA lets you take out what they consider to be a super conforming or high balance loan.

For a super conforming loan, the borrowing limit can be as high as 150% of the $647,200 national limit or $970,800.[1]

Having a super conforming loan means that you can borrow more money without having to make a higher down payment and pay more in interest like you would with a non-conforming or jumbo loan.

How Do Super Conforming Loans Work?

Super conforming loans work very much like conforming loans. What you need to qualify, the available interest rates and loan terms are similar to a conforming loan. The key difference is how where you live affects the amount you can borrow.

Qualifying for a super conforming loan

Qualifying for a super conforming loan is essentially the same as qualifying for a regular conforming mortgage loan.[3]

  • Minimum down payment: 5% – can be as low as 3% for conforming loans
  • Minimum credit score: 620 for a fixed-rate mortgage or 640 for an adjustable-rate mortgage (ARM)
  • Required DTI: 36% – 45%

Of course, these are just the minimum requirements, every lender will have their own criteria based on your creditworthiness and the amount you plan to borrow.

Super conforming loan limits

Most super conforming loan limits are set in higher-density urban areas, though you can also get a super conforming loan in the vast expanse of Alaska and compact islands of Hawaii.

Here are some areas that allow for a super conforming loan, with the current loan limit for a single family home:[4]

  • Denver, CO: $684,250
  • Nashville, TN: $694,600
  • Key West, FL: $710,700
  • Boston, MA: $770,500
  • San Diego, CA: $879,750
  • Seattle, WA: $891,250

But in most cases, the limit is set at 150% of the loan limit or $970,800.

However, if you’re interested in buying a multi-family property or an investment property, you can borrow more.[5]

Number of unitsConforming loan limitSuper conforming loan limit
1$647,200$970,800
2$828,700$1,243,050
3$1,001,650$1,502,475
4$1,244,850$1,867,275

Super conforming loan rates

Because super conforming loans still meet the standards set by Fannie Mae and Freddie Mac, the criteria for borrowing and the interest rates available are roughly the same as a conforming loan. 

Super conforming loans can be fixed-rate mortgages or adjustable-rate mortgages (ARM) with loan terms ranging from 10 – 30 years, though the introductory period for a super conforming ARM must be 5 years or longer.[6]

What Is the Difference Between a Super Conforming Loan and a Jumbo Loan?

Unlike a super conforming loan that meets FHFA lending limits, a jumbo loan is a mortgage loan that exceeds the conforming loan limits for your area. 

As previously mentioned, lending limits are set by the FHFA at the county level. So if you wanted to buy a home in Los Angeles County, a jumbo loan would be any loan exceeding the $970,800 loan limit. But if you wanted to buy a home in the adjacent San Bernadino County, a jumbo loan would be any loan exceeding $647,200.[4]

Because jumbo loans are considered higher risk than conforming loans or super conforming loans, you should expect to pay more in interest. Your lender will probably require a higher credit score, lower DTI and also require you to pay at least 10% – 20% down.

It’s a Loan for a Super-Sized Market 🥤🍟

Ready to buy a tall building (or at least a more expensive building) with a single mortgage? If you live in a high-cost area, a super conforming loan may be the hero you need to buy the home of your dreams without having to worry about the higher costs of a jumbo loan.

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  1. Federal Housing Finance Agency. “FHFA Announces Conforming Loan Limits for 2022.” Retrieved June 2022 from https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/super-conforming-mortgages

  2. National Association of REALTORS®. “2022 Home Buyers and Sellers Generational Trends Report.” Retrieved May 2022 from https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/super-conforming-mortgages

  3. Fannie Mae. “ELIGIBILITY MATRIX.” Retrieved May 2022 from https://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/super-conforming-mortgages

  4. Federal Housing Finance Agency. “Conforming Loan Limit Map.” Retrieved June 2022 from https://www.fhfa.gov/DataTools/Tools/Pages/Conforming-Loan-Limit-Map.aspx

  5. Fannie Mae. “Fannie Mae and Freddie Mac Conforming Loan Limits for Mortgages Acquired in Calendar Year 2022 and Originated after 10/1/2011.” Retrieved June 2022 from https://www.fhfa.gov/DataTools/Tools/Pages/Conforming-Loan-Limit-Map.aspx

  6. Freddie Mac. “Super Conforming Mortgages.” Retrieved June 2022 fromhttps://sf.freddiemac.com/working-with-us/origination-underwriting/mortgage-products/super-conforming-mortgages

ICYMI

In Case You Missed It

  1. Most super conforming loan limits are set in higher density urban areas, though you can also get a super conforming loan in Alaska or Hawaii

  2. Super conforming loans can be fixed-rate mortgages or adjustable-rate mortgages (ARM) with loan terms ranging from 10 – 30 years

  3. Because jumbo loans are considered higher risk than conforming loans or super conforming loans, you should expect to pay more in interest

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