Conforming Loan Limit

A A A

DEFINITION

The limit on the size of a mortgage which Fannie Mae and Freddie Mac will purchase and/or guarantee. The conforming loan limit is set annually by Fannie Mae's and Freddie Mac's federal regulator, The Office of Federal Housing Enterprise Oversight (OFHEO). OFHEO uses the October to October percentage increase/decrease in the average house price in the monthly interest rate survey of the Federal Housing Finance Board (FHFB) to adjust the conforming loan limits for the subsequent year.

INVESTOPEDIA EXPLAINS

Mortgages which exceed the conforming loan limit are known as jumbo mortgages. The interest rate on jumbo mortgages can be higher than the interest rate on conforming mortgages. A borrower whose mortgage amount slightly exceeds the conforming loan limit should analyze the economics of reducing their loan size through a larger downpayment or possibly using secondary financing to qualify for a conforming mortgage verses a jumbo mortgage.


RELATED TERMS
  1. Mortgage

    A debt instrument, secured by the collateral of specified real estate property, ...
  2. Country Limit

    The aggregate limit that a bank places on all borrowers in a given foreign country. ...
  3. Conforming Loan

    A mortgage that is equal to or less than the dollar amount established by the ...
  4. Conventional Mortgage

    A type of mortgage in which the underlying terms and conditions meet the funding ...
  5. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 to expand the ...
  6. Freddie Mac - Federal Home Loan ...

    A stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress ...
  7. Jumbo Loan

    A mortgage with a loan amount exceeding the conforming loan limits set by the ...
  8. Maximum Loan Amount

    Describes the maximum amount that a borrower can borrow. The maximum loan amount ...
  9. Forbearance

    A temporary postponement of mortgage payments.
  10. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes the monthly loan ...
Related Articles
  1. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  2. 4 Steps To Attaining A Mortgage
    Credit & Loans

    4 Steps To Attaining A Mortgage

  3. Understanding The Mortgage Payment Structure
    Credit & Loans

    Understanding The Mortgage Payment Structure

  4. 5 Things You Shouldn't Do During A Recession
    Budgeting

    5 Things You Shouldn't Do During A Recession

  5. Forecasting Mortgage Rates: Buy, Sell ...
    Investing Basics

    Forecasting Mortgage Rates: Buy, Sell ...

  6. What counts as
    Credit & Loans

    What counts as "debts" and "income" ...

  7. How does my debt-to-income (DTI) ratio ...
    Home & Auto

    How does my debt-to-income (DTI) ratio ...

  8. Financing Options For Buyers Of Foreclosed ...
    Credit & Loans

    Financing Options For Buyers Of Foreclosed ...

  9. What are the best ways to invest in ...
    Investing Basics

    What are the best ways to invest in ...

  10. Can I buy a house directly from Fannie ...
    Home & Auto

    Can I buy a house directly from Fannie ...

comments powered by Disqus
Hot Definitions
  1. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
  2. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  3. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  4. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  5. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  6. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
Trading Center