What is a Conforming Loan?
A conforming loan follows the guidelines set by Fannie Mae and Freddie Mac. Conforming loans also adhere to other guidelines such as the loan-to-value (LTV) and debt-to-income (DTI) ratios, requirements for private mortgage insurance, and more.
2020 Conforming Loan Limits
Conforming loan limits for 2020 are any loan amount under $510,400, and up to $765,600 in certain high-cost areas.
Contact us to learn more about the conforming loan limits in your area!
Benefits of Conforming Loans
Conforming loans can be advantageous if you qualify under the applicable guidelines.
Conforming loans are the most common mortgages in the U.S. Although they are extremely common, the guidelines can be inflexible and therefore not for everyone. Conforming loans have guidelines that are best for people who have a steady income like W2, hourly, or a salary.
What are the Conforming Loan Guidelines?
Typically, borrowers must meet the following guidelines to qualify for a conforming loan:
- Loan amount must not exceed $510,400 (or $765,600 in certain areas)
- May not have a highly variable bonus or commission income
- Must qualify based on a fixed salary
- May not qualify using liquid assets
- May not own real estate properties and generate rental income
- May not be self-employed
If you don’t fit into the guidelines of Fannie Mae or Freddie Mac, there are many other options for you!