March 23rd, 2018 5:41 AM by Jackie A. Graves, President
What Is a Conforming Loan?
A conforming loan is one that meets the standards of loan
guidelines established by government-sponsored enterprises Freddie Mac and
Fannie Mae. The most well-known conforming loan guideline is the size of the
loan. There are two different types of conforming loan size limits: standard
and high-cost area. Most counties in the United States have a conforming loan
limit of $424,100 for a one-unit property.
However, there are high-cost areas of the country that have
higher loan limits. Most high-cost areas have maximum loan limits for a
one-unit property around $636,150. Conforming loans must also meet other
guidelines related to a borrower’s loan-to-value ratio, debt-to-income ratio,
credit score and history, documentation requirements, etc.
Conforming loans usually have lower interest rates than
non-conforming loans because they are easily bought and sold on the secondary
mortgage market. They tend to be a less risky investment for lenders.
If you are in need of a large loan amount you may need a jumbo loan. A jumbo loan
is a non-conforming loan because it exceeds the county’s general or high-loan
limit. In most areas of the country that would mean a loan amount of more than
If you don’t qualify for a conforming loan, getting an FHA loan
might also be a good alternative because their loan limits vary by county. You
can shop for live, customized conforming, jumbo and FHA loan quotes on Zillow.
To find the loan limits for conforming loans in your state
and county, check out our complete
list of Conforming Loan Limits for 2017.
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