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 $417,000 for a one-unit property.
However, there are high-cost areas of the country that have loan limits up to $721,050. Most high-cost areas have maximum loan limits around $625,500. 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. [Read more…]