What Is a Conforming Loan?
A Conforming Loan is a mortgage that adheres to guidelines established by Fannie Mae and Freddie Mac. These government-sponsored enterprises, or GSEs, were created by the federal government to help regulate the housing market through the purchase of mortgages from lenders. In order to be eligible for purchase, mortgages must conform to GSE guidelines, including a lending limit that is currently $453,100 in most U.S. counties*.
Conforming loans, widely known as conventional loans, must also be underwritten to meet certain income and asset requirements. As such, they must adhere to the documentation requirements set forth by Fannie Mae and Freddie Mac.
Mortgages that do not conform to GSE guidelines are known as Non-Conforming Loans. Examples of Non-Conforming Loans include Jumbo Loans, Super Jumbo Loans, and many customized Portfolio Loans.
*Lending limits are higher in Hawaii, Alaska, parts of California, and certain U.S. counties where the cost of living is particularly high. Speak with a mortgage consultant for further details.