Conforming Loans
Conforming Loans
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year in October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.
By purchasing mortgage loans from lenders, these agencies can provide a continuous flow of affordable funding to banks to reinvest their money back into providing more mortgage loans. Fannie Mae and Freddie Mac buy only those mortgage loans that are conforming - that is, they conform to Fannie Mae or Freddie Mac requirements - to repackage into the secondary market. This in turn effectively decreases the demand for non-conforming loans as well as help keep mortgage interest rates low.
Conforming Loan Limits:
| Number of Units |
Maximum Original Mortgage Balance |
Alaska, Guam, Hawaii, and U.S. Virgin Islands |
| 1 | $417,000 | $625,500 |
| 2 | $533,850 | $800,775 |
| 3 | $645,300 | $967,950 |
| 4 | $801,950 | $1,202,925 |
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