Conforming Loan

A conforming loan is a mortgage that meets the dollar limits set by the Federal Housing Finance Agency (FHFA) and the funding criteria of Freddie Mac and Fannie Mae. For borrowers with excellent credit, conforming loans are advantageous due to their low interest rates. 

Key Takeaways

• A conforming loan is a mortgage with terms and conditions that meet the funding criteria of Fannie Mae and Freddie Mac.

• Conforming loans cannot exceed a certain dollar limit, which changes from year to year. In 2023, the limit is $726,200 for most parts of the U.S. but is higher in some more expensive areas.

• Conforming loans typically offer lower interest rates than other types of mortgages.

• Lenders prefer to issue conforming loans because they can be packaged and sold in the secondary mortgage market.