Finance
A conventional loan that conforms to Fannie Mae and Freddie Mac guidelines is called a:
AJumbo loan
BSubprime loan
CConforming loan✓ Correct
DBridge loan
Explanation
A conforming loan meets the underwriting standards and loan limits set by Fannie Mae and Freddie Mac, allowing it to be purchased on the secondary market. Loans exceeding the conforming loan limit are called jumbo loans.
People Also Study
Related Connecticut Questions
- Which government-sponsored enterprise (GSE) purchases conventional conforming mortgage loans on the secondary market?Finance
- A Connecticut property is purchased for $380,000 with a 10% down payment. The buyer obtains a conventional loan for the balance. What is the loan amount?Finance
- Connecticut borrowers who take out a first-lien mortgage over a certain loan limit are considered to have a 'jumbo' or non-conforming loan because:Finance
- In Connecticut, the maximum conforming loan limit for a single-family home in 2024 is set by:Finance
Key Terms to Know
Private Mortgage Insurance (PMI)
Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Study This Topic
Practice More Connecticut Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Connecticut Quiz →