Maximum Loan Amount

AAA

DEFINITION of 'Maximum Loan Amount'

Describes the maximum amount that a borrower can borrow. The maximum loan amount is based on a combination of different factors involving the specific loan program, the value of the property that secures the loan and the borrower's qualifying ratios and credit history. Lenders typically offer various loan programs with maximum loan amounts tailored for different classes of borrowers.

INVESTOPEDIA EXPLAINS 'Maximum Loan Amount'

In the mortgage industry, the Office of Federal Housing Enterprise Oversight (OFHEO) sets maximum loan amount limits on the mortgages that Fannie Mae and Freddie Mac may guarantee.

Because Fannie Mae and Freddie Mac guarantee a large percentage of mortgages originated in the United States, the "conforming loan limit" is an important number in the mortgage finance industry, as large mortgage default levels will create great strain on Fannie Mae and Freddie Mac.

RELATED TERMS
  1. Inclusion Amount

    An additional amount of income that a taxpayer may have to report ...
  2. Country Limit

    The aggregate limit that a bank places on all borrowers in a ...
  3. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and ...
  4. Conforming Loan Limit

    The limit on the size of a mortgage which Fannie Mae and Freddie ...
  5. Maximum Loan-to-Value Ratio

    The maximum ratio of a loan's size to the value of the property, ...
  6. Fannie Mae - Federal National Mortgage ...

    A government-sponsored enterprise (GSE) that was created in 1938 ...
Related Articles
  1. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  2. Mortgages: How Much Can You Afford?
    Budgeting

    Mortgages: How Much Can You Afford?

  3. Are You Living Too Close To The Edge?
    Budgeting

    Are You Living Too Close To The Edge?

  4. Make A Risk-Based Mortgage Decision
    Options & Futures

    Make A Risk-Based Mortgage Decision

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center