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What Are Conforming Loans?
Conforming loans are conventional
loans that meet specific guidelines and conditions set forth by
Fannie Mae and
Freddie Mac.
These two stock-holding companies purchase
mortgage loans from lending institutions and secure them for resale to the
investment community. Buying back mortgage loans allow these agencies to provide
a continuous flow of affordable funding to banks that reinvest their money back
into more mortgage loans.
Fannie Mae
and
Freddie Mac establish maximum loan amounts, income requirements, down payment
requirements, and type of suitable properties. Loans that do not conform to
these guidelines are referred to as non-conforming loans.
2006 Conforming Loan Limits
Number of
Units |
Maximum original
principal balance |
Alaska, Guam, Hawaii,
and U.S. Virgin Islands only |
| 1 |
$417,000 |
$625,500 |
| 2 |
$533,850 |
$800,775 |
| 3 |
$645,300 |
$967,950 |
| 4 |
$801,950 |
$1,202,925 |
Mortgage Glossary10
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