Conforming

Conforming loans are residential mortgage loans that conform to Fannie Mae or Freddie Mac standards, hence the term conforming. Conforming loans may be retained by the originator or sold in the secondary mortgage market. The term “conforming” is most often used when speaking specifically about a mortgage amount; however, the terms “conforming” and “conventional” are frequently used interchangeably. Mortgages that exceed the conforming loan limit are classified as non-conforming or jumbo mortgages. The maximum loan limit for single-family homes (currently $417,000) is revised annually according to year-to-year changes in average purchase prices.

OFHEO (The Office of Federal Housing Enterprise Oversight), which sets the conforming loan limit on an annual basis, has regulatory oversight to ensure that Fannie Mae and Freddie Mac fulfill their charters and missions of promoting homeownership for lower income and middle class Americans. OFHEO uses the October to October percentage increase/decrease in average housing prices in the (FHFB) to adjust the conforming loan limits for the subsequent year.

If you currently own your own home, but aren’t sure if your loan is owned by Fannie Mae, click here to find out, and the link will take you to the Fannie Mae Loan look-up tool.