What is a Conforming Loan?

A conforming loan is one of the most common types of mortgage loans obtained when purchasing or refinancing. It is commonly the easiest mortgage loan to be approved for and accounts for well over half of all mortgages provided in the marketplace.

Conforming loans are those mortgages provided and meet the guidelines of Fannie Mae and Freddie Mac. Every year a maximum amount is set for conforming loans by the Federal Housing Finance Administration (FHFA). The maximum amount for 2022 conforming loans is $647,200 and the new amount was recently announced for 2023 and is $726,200.

Conforming loans are typically bundled with hundreds if not thousands of other mortgage loans and placed in a pool and sold to Fannie or Freddie. These pools are then securitized by mortgage back securities and sells to investors where interest is paid on them.

There are many different options when it comes to mortgages outside of conforming loans such as VA, FHA, USDA, Jumbo and subprime (Non-QM). It is best to consult with your mortgage expert to gain the best advice and to understand what options are available.