Conforming loan

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A conforming loan is a loan that meets bank funding criteria.

Because of its stake in the mortgage market and because of its history, Fannie Mae and Freddie Mac each year set the limit on what constitutes a conforming loan, based on the October-to-October changes in mean home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.) The conforming loan limit is 50 percent higher in Alaska, Hawaii, Guam and the US Virgin Islands.

Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.

Prior to 1984, second mortgage limits were the same as first mortgage limits. Subsequent legislation reduced the limits to 50% of first mortgage limits. Fannie Mae had no second mortgage program before 1981.

[edit] Conforming Loan Limits

Following are the current and historical Conforming Loan Limits:

Year	Most of U.S.				Alaska, Hawaii, Guam, U.S. Virgin Islands
Year	One-unit	Two-family	Three-family	Four-family	One-unit	Two-family	Three-family	Four-family	Second Loan
2007	$417,000	$533,850	$645,300	$801,950	$625,500	$800,775	$967,950	$1,202,925
2006	$417,000	$533,850	$645,300	$801,950	$625,500	$800,775	$967,950	$1,202,925
2005	$359,650	$460,400	$556,500	$691,600	$539,475	$690,600	$834,750	$1,037,400
2004	333700	427150	516300	641650	500550	640725	774450	962475	166850
2003	322700	413100	499300	620500	484050	619650	748950	930750	161350
2002	300700	384900	465200	578150	451050	577350	697800	867225	150350
2001	275000	351950	425400	528700	412500	527925	638100	793050	137500
2000	252700	323400	390900	485800	379050	485100	586350	728700	126350
1999	240000	307100	371200	461350	360000	460650	556800	692025	120000
1998	227150	290650	351300	436600	340725	435975	526950	654900	113575
1997	214600	274550	331850	412450	321900	411825	497775	618675	107300
1996	207000	264750	320050	397800	310500	397125	480075	596700	103500
1995	203150	259850	314100	390400	304725	389775	471150	585600	101575
1994	203150	259850	314100	390400	304725	389775	471150	585600	101575
1993	203150	259850	314100	390400	304725	389775	471150	585600	101575
1992	202300	258800	312800	388800	303450	388200	469200	583200	101150
1991	191250	244650	295650	367500	286875	366975	443475	551250	95625
1990	187450	239750	289750	360150	281175	359625	434625	540225	93725
1989	187600	239950	290000	360450	281400	359925	435000	540675	93800
1988	168700	215800	260800	324150	253050	323700	391200	486225	84350
1987	153100	195850	236650	294150	229650	293775	354975	441225	76550
1986	133250	170450	205950	256000	199875	255675	308925	384000	66625
1985	115300	147500	178200	221500	172950	221250	267300	332250	57650
1984	114000	145800	176100	218900	171000	218700	264150	328350	57000
1983	108300	138500	167200	207900	162450	207750	250800	311850	108300
1982	107000	136800	165100	205300	160500	205200	247650	307950	107000
1981	98500	126000	152000	189000	147750	189000	228000	283500	98500
1980	93750	120000	145000	180000	140625	180000	217500	270000	N/A