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.

BREAKING DOWN '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. Conforming Loan Limit

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

    A mortgage that is equal to or less than the dollar amount established ...
  3. 100% Mortgage

    A mortgage loan in which the borrower receives a loan amount ...
  4. Nonconforming Mortgage

    A mortgage that does not meet the guidelines of Government Sponsored ...
  5. Whole Loan

    A single residential or commercial mortgage that a lender has ...
  6. Origination

    The process of creating a home loan or mortgage. During the origination ...
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. 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.
  3. Personal Finance

    What You Need to Know About Fannie Mae Loans

    Fannie Mae (officially the Federal National Mortgage Association, or FNMA) is a government-sponsored enterprise (GSE) – that is, a publicly traded company which operates under Congressional charter ...
  4. Insights

    How Fannie Mae And Freddie Mac Were Saved

    These mortgage giants had to be put under government conservatorship, driving home the gravity of the subprime crisis.
  5. Personal Finance

    Trended Credit Data Could Increase Interest Rates for Borrowers (FNMA, EFX)

    Mortgage lenders will soon be required to use trended credit data to qualify borrowers. As a result, many borrowers could have to take higher interest rates.
  6. 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.
  7. 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.
  8. Personal Finance

    Conventional Mortgage

    A conventional mortgage is any type of homebuyer's load that is not offered or secured by a government entity but rather available through a private lender.
  9. Investing

    Commercial Real Estate Loans

    Obtaining a commercial real estate loan is quite different from borrowing for residential real estate. Here's what to expect and how to get what you need.
  10. Personal Finance

    The New Mortgage Business: More Than Just Loans

    Many mortgage brokers adapted to the post-subprime environment by becoming loan modification specialists.
RELATED FAQS
  1. How does Fannie Mae (FNMA) make money?

    Fannie Mae is a government-sponsored enterprise (GSE) established in 1938 to expand the flow of mortgage money by creating ... Read Answer >>
  2. 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 >>
  3. Are secured personal loans better than unsecured loans?

    Read about the differences between secured loans and unsecured loans and how they are used. Learn about forms of collateral ... Read Answer >>
  4. How do construction loans work?

    Construction loans are obtained either by the prospective home owner or the actual builder. There are two types of construction ... Read Answer >>
  5. What are the pros and cons of life insurance policy loans?

    Find out the pros and cons of borrowing against your life insurance policy to help you decide if this loan type is the right ... Read Answer >>
  6. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Trading Center