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 secure them for resale to the investment community. All year round, Fannie Mae and Freddie Mac are working for you, establishing limits on what constitutes a conforming loan in a mean home price. Buying back mortgage loans allows these agencies to provide a continuous flow of affordable funding to banks that reinvest money back into additional mortgage loans. Fannie Mae and Freddie Mac exclusively buy loans that are conforming, to repackage into the secondary market and effectively decreasing the demand for non-conforming loans.
There are several programs for conventional or conforming loans, including:
- Fannie Mae HomeStyle Loan Program
- Freddie Mac Home Possible and Home Possible Advantage
- HomeReady Mortgage
- Home Affordable Refinance Program
Conforming Loan Limits
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Conventional loans are mortgage loans offered by non-government sponsored lenders. These loan types include:
- Fixed Rate Loans
- Adjustable Rate Loans (ARMs)
- Combination (Hybrid) Loans
- Balloon Mortgages and Pledge Asset Loans
- Jumbo / Construction Loans
- Reverse Mortgage
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