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, from October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.
Buying back mortgage loans allows these agencies to provide a continuous flow of affordable funding to banks that reinvest their money into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.
Conforming Loan Limits
Number of Units
Maximum Original Principal
Alaska, Guam, Hawaii, and U.S. Virgin Islands Only
NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.
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