In a 2026 high-cost county, Sofia applies for a $950,000 conventional loan on a one-unit home. The county's conforming limit is $1,100,000. How should the loan be classified?
Correct Answer
A) As a conforming conventional loan because it stays within that county's limit
The loan is conforming in that county because the applicable county conforming limit is $1,100,000 and Sofia's loan amount is $950,000. In high-cost areas, the relevant question is the local limit, not merely whether the amount exceeds the national baseline.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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