DEFINITION of 'Conforming Loan'

A mortgage that is equal to or less than the dollar amount established by the conforming loan limit set by Fannie Mae and Freddie Mac's Federal regulator, The Office of Federal Housing Enterprise Oversight (OFHEO) and meets the funding criteria of Freddie Mac and Fannie Mae.

BREAKING DOWN 'Conforming Loan'

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.

OFHEO, 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 Monthly Interest Rate Survey of the Federal Housing Finance Board (FHFB) to adjust the conforming loan limits for the subsequent year.

RELATED TERMS
  1. Conforming Loan Limit

    The limit on the size of a mortgage which Fannie Mae and Freddie ...
  2. Maximum Loan Amount

    Describes the maximum amount that a borrower can borrow. The ...
  3. Office of Federal Housing Enterprise ...

    A federal regulatory body that formerly oversaw the government-sponsored ...
  4. Federal Housing Finance Agency ...

    A U.S. government agency created by the Housing and Economic ...
  5. Agency Swap Program

    A form of securitization whereby single-family residential mortgages ...
  6. Conventional Mortgage

    A type of mortgage in which the underlying terms and conditions ...
Related Articles
  1. Insights

    Fannie Mae, Freddie Mac And The Credit Crisis Of 2008

    Is the U.S. Congress' failure to rein in these mortgage giants to blame for the financial fallout?
  2. Investing

    Should You Invest In Fannie Mae Stock?

    If you're risk-adverse, you might want to avoid investing in Fannie Mae. But if you're up for it, high risk could translate to high reward.
  3. Personal Finance

    What You Need To Know About Fannie Mae Mortgages

    Considering a Fannie Mae mortgage loan? Here's what you should know, from size limits and rates, to required documents.
  4. Personal Finance

    Why Fannie Mae And Freddie Mac Might Be In Trouble

    Fannie Mae and Freddie Mac are under increased scrutiny as debates continue about conservatorship, share price, and profit allocations.
  5. Investing

    Fannie Mae: What It Does And How It Operates

    Chances are that you've heard of Fannie Mae. But do you know what it does and how it operates?
  6. Personal Finance

    New Rules May Make It Easier to Get a Mortgage

    Fannie Mae and Freddie Mac have come to terms with lenders on how to solve mortgage disputes. This could be good news for people with lower credit ratings.
  7. Personal Finance

    When You Need a Jumbo or Super-Jumbo Mortgage

    Rising housing prices have made so-called jumbo and super-jumbo loans a necessity for more homebuyers.
  8. Investing

    The Top 5 Fannie Mae Shareholders (FNMA)

    Find about the individuals, funds and companies that are top shareholders of Fannie Mae stock. Learn about their profiles and their relationships with Fannie Mae.
  9. Personal Finance

    Jumbo Mortgage Limits: How Much Can You Borrow?

    If you want to buy a home that costs close to half a million or more, you likely need to know what the jumbo mortgage limits are. Here are the details.
  10. Personal Finance

    The Homebuyer's Guide To Jumbo Mortgages

    What they are – and what it takes to get one.
RELATED FAQS
  1. How do you use the FNMA selling guide?

    Learn about Fannie Mae Selling Guide and find out details about how its parts provide support to the business relationship ... Read Answer >>
  2. Are mortgage-backed securities backed by any guarantees?

    Actually, any mortgage-backed security (MBS) guarantee depends on who issued it.To review, an MBS is a security, created ... Read Answer >>
  3. How does a decline in housing prices affect the banking sector?

    Learn about the affects on banks when housing prices go down, including loan delinquency rates, mortgage foreclosures, and ... Read Answer >>
  4. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  5. What are the best ways to invest in mortgage-backed securities (MBS)?

    Find out how you can start investing in real estate through mortgage-backed securities. Read Answer >>
Hot Definitions
  1. Quadruple Witching

    The expiration date of various stock index futures, stock index options, stock options and single stock futures. All stock ...
  2. Co-pay

    A type of insurance policy where the insured pays a specified amount of out-of-pocket expenses for health-care services such ...
  3. Protectionism

    Government actions and policies that restrict or restrain international trade, often done with the intent of protecting local ...
  4. Fiduciary

    A fiduciary is a person who acts on behalf of another person, or persons to manage assets.
  5. Demonetization

    Demonetization is the act of stripping a currency unit of its status as legal tender and is necessary whenever there is a ...
  6. Investment

    An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic ...
Trading Center