Conforming Loan

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    Learn more about the conforming loan guidelines and requirements, how to qualify, and how to begin your mortgage process.

    What is a Conforming Loan?

    Conforming loans adhere to the loan limits set by Fannie Mae and Freddie Mac. These types of loans also must meet specific guidelines related to your credit score and debt-to-income (DTI) ratios.


    What are the 2020 Conforming Loan Limits?

    The limits are set by the Federal Housing Finance Agency (FHFA) and may change from year to year. The 2020 conforming loan limits are $510,400 and up to $765,600 in certain high-cost areas. This means that to qualify for a conforming loan, the loan amount must not exceed either $510,400 or $765,600, depending on where the property is located.

    Contact us to learn more about the conforming loan limit in your area!


    What are the New 2021 Conforming Loan Limits?

    The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. On November 24, the FHFA announced that the maximum 2021 conforming loan limits for one-unit properties will be $548,250, up from $510,400 in 2020, a 7.5% jump. The new ceiling loan limit for one-unit properties in most high-cost areas will be $822,375, or 150% of $548,250. Since 2016, the conforming loan limit has risen $131,250.

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    What are the Conforming Loan Guidelines?

    Along with the loan amount limits mentioned above, the borrower must meet the following guidelines to qualify for a conforming loan:

    What’s the Difference? – Conforming vs. Nonconforming Loan

    The main difference between these two types of loans is the requested loan amount – if the loan amount exceeds $510,400 or $765,600 (depending on the area), it is considered nonconforming. Additionally, if a borrower is self-employed, owns multiple investment properties, or has a higher debt-to-income ratio, they may qualify for a nonconforming loan. Some examples of nonconforming loans include jumbo and non-qm loans. Most nonconforming loans will have higher interest rates and stricter down payment requirements.


    What is the Benefit of Getting a Conforming Loan?

    Conforming loans are the most common type of mortgage in the U.S. Some benefits include: