Conforming Mortgage Loans

Conforming loans typically refer to loan amounts that conform to government service standards as determined by Fannie Mae & Freddie Mac. These two government agencies, set up in the early 1940's, were established to help people finance new homes.

Conforming home loans are considered lower risk and are more easily sold to investors in bulk on the secondary market. And the main reason is that they adhere to underwriting rules set by Fannie and Freddie, which include credit and income requirements. The Federal Housing Finance Agency (FHFA) publishes annual conforming loan limits that apply to all conventional mortgages, including general loan limits and the high-cost area loan limits. High-cost area loan limits vary by geographic location. Conforming loan limit for properties are as under:

• One-unit properties: $417,000
• Two-unit properties: $533,850
• Three-unit properties: $645,300
• Four-unit properties: $801,950

For properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the conforming loan limits are 50% higher.

High-Cost Conforming Loan Limits

The Economic Stimulus Act of 2008 temporarily increased the conforming loan limit in high-cost areas, increasing it to as much as $729,750 in expensive metropolitan areas of the United States such as Bay Area and Los Angeles. High-cost area loan limits have increased for 46 counties due to a high-cost area adjustment or the county being newly assigned to a high-cost area.

Below are the high-cost loan limits for properties in United States:

• One-unit properties: $625,500
• Two-unit properties: $800,775
• Three-unit properties: $967,950
• Four-unit properties: $1,202,925

For properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the conforming loan limits are 50% higher.

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