Conforming loan


In the United States, a conforming loan is a mortgage loan that conforms to GSE guidelines. The most well-known guideline is the size of the loan, which, for 2019, was generally limited to $484,350 for single family homes in the continental US. Other guidelines include borrower's loan-to-value ratio, debt-to-income ratio, credit score and history, documentation requirements, etc.
In general, any loan that does not meet guidelines is a non-conforming loan. A loan that does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan.

History

Starting in 1970, Fannie Mae was authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked with Freddie Mac to develop uniform mortgage documents and national standards for what would come to be known as a conforming loan.

Importance

Fannie Mae and Freddie Mac are continuously in the market for conforming loans; because of this, conforming loans benefit from greater liquidity than non-conforming loans.

Criteria

The Federal Housing Finance Agency publishes annual conforming loan limits that dictates the mortgages that Fannie Mae and Freddie Mac can buy. The maximum loan amount is set based on the October-to-October changes in median home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers
A temporary increase in the Conforming Loan Limits for high-cost areas of living was incorporated into the 2008 economic stimulus package. Congress authorized an increase of the single family residences limits to the lesser of $729,750 or 125% of the median home value within a metropolitan statistical area. The new Jumbo-Conforming program was adopted by Fannie Mae and Freddie Mac effective from April 1, 2008 until December 31, 2010. The bill was signed into law by President Bush on February 13, 2008, but the new rates were not being honored by any lenders.
The general loan limits for 2017 increased and apply to loans delivered to Fannie Mae in 2017. This was the first time the base loan limits had increased since 2006. 2018 and 2019 saw a further increase.

Conforming Loan Limits

Per Fannie Mae:
*Counties considered a High Cost Area are listed below:
STATECOUNTY
AKALEUTIANS EAST
AKALEUTIANS WEST
AKANCHORAGE
AKBETHEL
AKBRISTOL BAY
AKDENALI
AKDILLINGHAM
AKFAIRBANKS NORTH
AKHAINES
AKHOONAH-ANGOON
AKJUNEAU
AKKENAI PENINSULA
AKKETCHIKAN GATEWAY
AKKODIAK ISLAND
AKKUSILVAK CENSUS AREA
AKLAKE AND PENINSULA
AKMATANUSKA-SUSITNA
AKNOME
AKNORTH SLOPE
AKNORTHWEST ARCTIC
AKPETERSBURG CENSUS AREA
AKPRINCE OF WALES-HYDER
AKSITKA
AKSKAGWAY MUNICIPALITY
AKSOUTHEAST FAIRBANKS
AKVALDEZ-CORDOVA
AKWRANGELL
AKCITY/BOROUGH
AKYAKUTAT CITY
AKYUKON-KOYUKUK
CAALAMEDA
CAALPINE
CACONTRA COSTA
CAEL DORADO
CALOS ANGELES
CAMARIN
CAMONO
CAMONTEREY
CANAPA
CANEVADA
CAORANGE
CAPLACER
CASACRAMENTO
CASAN BENITO
CASAN DIEGO
CASAN FRANCISCO
CASAN LUIS OBISPO
CASAN MATEO
CASANTA BARBARA
CASANTA CLARA
CASANTA CRUZ
CASOLANO
CASONOMA
CAVENTURA
CAYOLO
COADAMS
COARAPAHOE
COBOULDER
COBROOMFIELD
COCLEAR CREEK
CODENVER
CODOUGLAS
COEAGLE
COELBERT
COGARFIELD
COGILPIN
COHINSDALE
COJEFFERSON
COLAKE
COOURAY
COPARK
COPITKIN
COROUTT
COSAN MIGUEL
COSUMMIT
CTFAIRFIELD
DCDISTRICT OF COLUMBIA
FLCOLLIER
FLMONROE
GAGREENE
GUGUAM
HIHAWAII
HIHONOLULU
HIKALAWAO
HIKAUAI
HIMAUI
IDBLAINE
IDCAMAS
IDLINCOLN
IDTETON
MABRISTOL
MADUKES
MAESSEX
MAMIDDLESEX
MANANTUCKET
MANORFOLK
MAPLYMOUTH
MASUFFOLK
MDANNE ARUNDEL
MDBALTIMORE
MDBALTIMORE CITY
MDCALVERT
MDCARROLL
MDCHARLES
MDFREDERICK
MDHARFORD
MDHOWARD
MDMONTGOMERY
MDPRINCE GEORGE'S
MDQUEEN ANNE'S
MPNORTHERN ISLAND
MPSAIPAN
MPTINIAN
NCCAMDEN
NCCURRITUCK
NCGATES
NCHYDE
NCPASQUOTANK
NCPERQUIMANS
NELINCOLN
NELOGAN
NEMCPHERSON
NHROCKINGHAM
NHSTRAFFORD
NJBERGEN
NJESSEX
NJHUDSON
NJHUNTERDON
NJMIDDLESEX
NJMONMOUTH
NJMORRIS
NJOCEAN
NJPASSAIC
NJSOMERSET
NJSUSSEX
NJUNION
NYBRONX
NYDUTCHESS
NYKINGS
NYNASSAU
NYNEW YORK
NYORANGE
NYPUTNAM
NYQUEENS
NYRICHMOND
NYROCKLAND
NYSUFFOLK
NYWESTCHESTER
PAPIKE
RIBRISTOL
RIKENT
RINEWPORT
RIPROVIDENCE
RIWASHINGTON
TNCANNON
TNCHEATHAM
TNDAVIDSON
TNDICKSON
TNHICKMAN
TNMACON
TNMAURY
TNROBERTSON
TNRUTHERFORD
TNSMITH
TNSUMNER
TNTROUSDALE
TNWILLIAMSON
TNWILSON
UTSALT LAKE
UTSUMMIT
UTTOOELE
VAALBEMARLE
VAALEXANDRIA
VAAMELIA
VAARLINGTON
VABUCKINGHAM
VACAROLINE
VACHARLES CITY
VACHARLOTTESVILLE
VACHESAPEAKE
VACHESTERFIELD
VACLARKE
VACOLONIAL HEIGHTS
VACULPEPER
VACUMBERLAND
VADINWIDDIE
VAFAIRFAX
VAFAIRFAX INDEPENDENT CITY
VAFALLS CHURCH
VAFAUQUIER
VAFLUVANNA
VAFREDERICKSBURG
VAGLOUCESTER
VAGOOCHLAND
VAGREENE
VAHAMPTON
VAHANOVER
VAHENRICO
VAHOPEWELL
VAISLE OF WIGHT
VAJAMES CITY
VAKING AND QUEEN
VAKING WILLIAM
VALANCASTER
VALOUDOUN
VALOUISA
VAMANASSAS
VAMANASSAS PARK
VAMATHEWS
VANELSON
VANEW KENT
VANEWPORT NEWS
VANORFOLK
VAPETERSBURG
VAPOQUOSON
VAPORTSMOUTH
VAPOWHATAN
VAPRINCE GEORGE
VAPRINCE WILLIAM
VARAPPAHANNOCK
VARICHMOND INDEPENDENT CITY
VASPOTSYLVANIA
VASTAFFORD
VASUFFOLK
VASURRY
VASUSSEX
VAVIRGINIA BEACH
VAWARREN
VAWILLIAMSBURG
VAYORK
VIST. CROIX
VIST. JOHN
VIST. THOMAS
WAKING
WAPIERCE
WASAN JUAN
WASNOHOMISH
WVJEFFERSON
WYTETON