| Conforming Loan | Non-Conforming Loan |
| Maximum Loan Limit |
Fixed upon by Freddie Mac and Fannie Mae | Maximum amount exceeds the limit set up by the two agencies. |
| Underwriting rules | The rules are in accordance with the criteria established by Fannie Mae and Freddie Mac. | Do not follow the guidelines set up by these agencies. |
| Credit Score | Such a loan is not score driven and is not disapproved because of low score. | In most cases, the credit scores can range from 500 and 700. |
| Interest rate | Rates do not depend upon credit scores as someone with a score of 800 can get the same interest rate as the other with a score of 600. Usually rates are 0.25% to 0.50% lower than that of jumbo loans. This is mainly because the loan amount is comparatively low and hence there is less risk involved. | The interest rates are higher than that of conforming loans. |
| Qualifying ratios | Lenders require a Front-end Ratio of 28% and Back-end Ratio or Debt-to-income Ratio of 36%. | Borrowers can qualify even with higher Debt-to-income Ratio. |
| Down payment | It requires a down payment of 20% of the sale price or the appraised value of the property, whichever is less. But it can be reduced to even 3%. Zero down payment loans are also available. Lenders often require the down payment to be paid from the borrowers's own funds; 2 months cash reserve in the bank is also required. The borrower may have to pay for private mortgage insurance (PMI) premiums since in most cases the down payment is low. | Mortgages are available with down payments of 10% to 20% of the sale price or the appraised value. The down payment can be gift assistance from relatives and friends, or the seller of the property can also finance it. Since the down payment is a little higher, therefore the borrower may not have to pay for the PMI policy. |
| Loan Fees | Loan processing fees are quite low. | Processing fees are slightly higher. |
| Loan Programs | Can be fixed rate as well as adjustable rate loans; has a market dominated by the former type. | Both fixed and adjustable rate loans are available; but market is dominated by the latter. |
