Mortgage: What is a Conforming Loan
Conforming Loan is a mortgage loan that conforms to government-sponsored enterprise (GSE) guidelines. A loan which do not meet guidelines is a non-conforming loan, specifically the loan amount exceeds the limit is known as a jumbo loan.
Government-sponsored enterprises are a group of financial services corporations created by the United States Congress, commonly known are Fannie Mae and Freddie Mac. GSEs’ function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent.
Fannie Mae was authorized by Congress to purchase residential mortgage loans. Fannie Mae along with Freddie Mac developed uniform mortgage documents and national standards for what would come to be known as a conforming loan. Fannie and Freddie are continuously in the market for conforming loans.
The Office of Federal Housing Enterprise Oversight (OFHEO) sets conforming loan limit for Fannie Mae and Freddie Mac. Besides the loan amount, criteria include debt-to-income ratio limits and documentation requirements.
Conforming Loan Limits
Single Family: $417,000
Second Loan: $ 208,500
Single Family (High Cost Area): $625,500
As of 2010. Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.
Mortgage: Good Faith Estimate on Home Loan
How to find out if your mortgage is owned or guaranteed by Fannie Mae
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