Conforming Loan Limits

In the mortgage industry, Conforming Loan Limits are the maximum loan amounts that Fannie Mae and Freddie Mac are legally allowed to purchase from lenders. These limits matter because they determine whether a home loan is considered:

✅Conforming (meets Fannie/Freddie guidelines)
❌Jumbo (exceeds the limit and has stricter requirements)

Why Conforming Loan Limits Matter

• Lower interest rates than jumbo loans
• Easier underwriting and smoother approvals
• Lower down-payment options (as little as 3% in some cases)
• Accessible to more borrowers

Who Sets the Limits?

The Federal Housing Finance Agency (FHFA) sets the limits each year, adjusting them based on changes in the national average home price.

Types of Conforming Loan Limits

There are two main categories:

1. Baseline Conforming Loan Limit

This applies to most U.S. counties.

2. High-Cost Area Limit

Higher limits exist for counties where home prices are significantly above the national average (e.g., parts of CA, NY, HI).

What Happens if You Exceed the Limit?

A loan above the limit becomes a Jumbo Loan, which typically requires:

• Higher credit scores
• Larger down payment
• More reserves
• Stricter underwriting