Conforming Loans:

Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and securitize them for resale to the investment community. Every year, from October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.

Buying back mortgage loans allow Fannie and Freddie to provide a continuous flow of affordable funding to banks that in turn reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that conform to their specific guidelines. This way they are providing a consistent investment security when repackaged into the secondary market. This in turn effectively decreases the need and/or demand for higher priced non-conforming loans.

Conforming Loan Limits:

Number of Units	Maximum original principal balance	Alaska, Guam, Hawaii, and U.S. Virgin Islands only
1	$417,000	$625,500
2	$533,850	$800,775
3	$645,300	$967,950
4	$801,950	$1,202,925

NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.
 

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