Conforming

Definition

Conforming in real estate refers to a mortgage that meets the guidelines set by the Federal Housing Finance Agency (FHFA) — including maximum loan limits, underwriting standards, and borrower qualifications — so the loan is eligible to be purchased by government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac. In short, a conforming loan follows the FHFA’s rules, which helps lenders sell the loan on the secondary market and generally results in lower interest rates and wider availability.

How conforming loans work

Conforming loans must stay within annual loan limits (which vary by county and property type) and meet standard credit, documentation, and debt-to-income requirements. Because they match GSE criteria, lenders can package and sell these loans to Fannie Mae or Freddie Mac, increasing market liquidity and allowing lenders to recycle capital and offer competitive pricing.

2025 conforming loan limits (key numbers)

Who typically qualifies

• Credit score: commonly 620 or higher
• Debt-to-income (DTI): generally up to about 45% (varies by lender and program)
• Property types: primary residences, second homes, and investment properties (subject to program rules)
• Documentation: standard income, asset, and employment verification as required by underwriting

Common loan features

• Interest rates: typically lower than non-conforming or jumbo loans
• Terms: fixed- or adjustable-rate options, commonly 15- or 30-year terms
• Purchasable by: Fannie Mae and Freddie Mac

Real-world examples

• If you buy a single-family home for $800,000 in a typical county in 2025, a conforming loan is possible because the standard limit is $806,500 — the lender can sell that loan to a GSE.
• In high-cost markets (examples: parts of California, New York, Washington), a conforming loan for a single-family home can be as high as $1,209,750 in 2025, avoiding the higher-cost, stricter jumbo category.
• Borrowers with ~620+ credit scores, acceptable DTI, and required documentation can often access conforming loans for purchase or refinance.

Conforming vs. non-conforming (including jumbo)

Conforming loans meet FHFA limits and GSE guidelines; non-conforming loans do not. A common non-conforming type is a jumbo loan, which exceeds conforming limits and typically carries higher interest rates and stricter approval requirements because GSEs won’t buy them.

Why it matters

Being conforming makes a loan more marketable to Fannie Mae and Freddie Mac. That marketability generally translates into cheaper borrowing costs, more flexible product options, and faster, more standardized processing — benefits that help stabilize and increase liquidity in the mortgage market.

How to tell if a loan is conforming

• Compare the loan amount to the FHFA county limit for the year (lenders track these limits annually).
• Ask your lender directly — they’ll confirm whether the loan adheres to conforming guidelines.
• Review loan disclosures and underwriting notes; loans intended for sale to Fannie Mae or Freddie Mac are usually identified as such.

Quick summary

A conforming loan is a mortgage that meets federal (FHFA) limits and GSE underwriting rules, making it eligible for purchase by Fannie Mae or Freddie Mac. For most U.S. counties in 2025 the single-family limit is $806,500 (up to $1,209,750 in high-cost areas). Conforming loans appeal to borrowers with fair-to-good credit and acceptable DTI because they typically offer lower rates and standardized terms compared with non-conforming alternatives.

FAQ

Q: Are conforming loans always cheaper than jumbo loans?
A: Generally yes, because GSE backing reduces lender risk and often results in lower rates, but exact pricing depends on borrower credit, down payment, and market conditions.

Q: Can investment properties get conforming loans?
A: Yes—conforming programs can cover primary residences, second homes, and investment properties, though underwriting rules and rates may differ.