What is the difference between a conforming loan and a sub-prime loan?
A conforming loan is just what it sounds like; in order to qualify you must conform to a rather strict set of guidelines. Conforming loans require your credit to be established and in good standing, that you have the ability to verify your income with pay stubs, W-2’s. There are conforming loans available to the self-employed borrowers; however the tax returns over the previous two years must reflect a profitable bottom line enough to budget for the loan. Most conforming loans require that you have liquid assets and that the debts are in line with the gross monthly income. While conforming loans may be a little more difficult to document and qualify for they tend to offer the better interest rates. Conforming lenders want to make loans to very stable borrowers and the strict guidelines are put in place to eliminate any possible risk. The lower the risk the more attractive the rate can be. A sub-prime is loan is for all the borrowers who for one reason or another do not qualify for a co
