What are Conforming Loans?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 August 2019
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Conforming loans are understood in the United States to be any loan that is structured as a mortgage loan and meets the requirements laid out in GSE guidelines. When loans are issued that do not comply with the provisions set by the GSE guidelines, the transaction is understood to be a non-conforming loans. Many conventional mortgages are structured as non-conforming loans, although all mortgage loans that are conducted under the auspices of the Fannie Mae and Freddie Mac government sponsorship must be in the form of a conforming loan.

The history of the conforming loan goes back to 1970. During that year, Fannie Mae was granted the authority to purchase and manage residential mortgages. Working in conjunction with Freddie Mac, the structure for the conforming loan was developed. This included creating mortgage documents that would be used by an lender authorized to accept and process a conforming loan, as well as national standards of evaluation that all authorized lenders would have to utilize in evaluating loan applications. While the documents and procedures have undergone some adjustments over the years, the essential elements have remained in place.


Currently, the Office of Federal Housing Enterprise Oversight is the agency that is charged with setting and maintaining the requirements and structure for a conforming loan. This includes establishing the conforming loan limit that is applies to both Fannie Mae and Freddie Mac. Setting this maximum loan amount helps to ensure the program is not overextended and thus create undesirable economic conditions within the country.

The structure for a conforming loan and the maximum loan amount does undergo review from time to time. Generally this involves analyzing the housing market as it relates to mean home price from October of one calendar year to the following October in the next consecutive year. From time to time, the US government will authorize a temporary increase in conforming loan limits in order to address a current economic situation. The most recent example of this temporary allowance took place in February 2008.


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