A military borrower is using a VA loan to purchase a $950,000 home in an area where the conforming limit is $850,000. How does this affect the loan's conforming status?
Correct Answer
A) VA loans are always non-conforming regardless of amount
VA loans are government loans, not conventional loans purchased by GSEs. They are classified as non-conforming loans regardless of loan amount because they don't conform to GSE underwriting standards, even though they may be below conforming loan limits.
Why This Is the Correct Answer
VA loans are government loans, not conventional loans purchased by GSEs. They are classified as non-conforming loans regardless of loan amount because they don't conform to GSE underwriting standards, even though they may be below conforming loan limits.
More Mortgage Knowledge Questions
A borrower is comparing two loan offers: Loan A has no points and 4.5% interest rate, Loan B has 2 points and 4.0% interest rate. The loan amount is $400,000. How much will the borrower pay upfront for the points on Loan B?
A lender charges a 1% origination fee on all loans. For a borrower obtaining a $250,000 mortgage, what is the maximum origination fee that can be charged without violating the points and fees test under the ATR/QM rule for a first-lien mortgage?
Under what circumstances can a Qualified Mortgage include a prepayment penalty?
A borrower is considering paying discount points to reduce their interest rate. Each point costs 1% of the loan amount and reduces the rate by 0.25%. On a $300,000 loan, how much would the borrower pay for 2 discount points?
A borrower asks about the difference between discount points and origination fees. What is the most accurate explanation?
People Also Study
Federal Mortgage-Related Laws
23% of exam
Mortgage Loan Origination Activities
25% of exam
Ethics, Fraud & Consumer Protection
17% of exam
Uniform State Test Content
12% of exam