What is it?
A conforming loan is a mortgage loan that follows or “conforms” to Fannie Mae and Freddie Mac established guidelines for the size of the loan and your particular financial situation. In brief, Fannie Mae and Freddie Mac are both Government Sponsored Enterprises, which means that the U.S. government backs them. A conforming loan is most commonly identified by its size, which generally is limited to $417,000 for single-family homes in the continental United States. In more expensive regions of the country, like Alaska and Hawaii, conforming loan limits are $625,500.
Key Things to Remember
- Conforming loans follow guidelines pertaining to your debt-to-income ratio, credit scores, income and minimum down payment.
- Most conforming loans require between a 5 percent and 20 percent down payment.
- Conforming loans often offer lower interest rates because the government, insuring that the lender will be paid back, backs them.
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