Conforming Loans
Conventional loans may be conforming and non-conforming. Conforming loans have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These two stockholder-owned corporations purchase mortgage loans complying with the guidelines from mortgage lending institutions, packages the mortgages into securities and sell the securities to investors. By doing so, Fannie Mae and Freddie Mac, like Ginnie Mae, provide a continuous flow of affordable funds for home financing that results in the availability of mortgage credit for Americans.
Fannie Mae and Freddie Mac guidelines establish the maximum loan amount, borrower credit and income requirements, down payment, and suitable properties. Fannie Mae and Freddie Mac announces new loan limits every year.
The 2008 conforming loan limits for first mortgages remain at the limits set in 2006 and 2007:
| One-family: |
$417,000 |
| Two-family: |
$533,850 |
| Three-family: |
$645,300 |
| Four-family: |
$801,950 |
The maximum loan amount is 50 percent higher in Alaska, Guam, Hawaii, and the Virgin Islands. Properties with five or more units are considered commercial properties and are handled under different rules.
The 2007 loan limit for second mortgages is $208,500 (in Alaska, Guam, Hawaii, and the Virgin Islands, the maximum second loan amount is $312,750). The sum of the original loan amounts of the first and second mortgages cannot exceed $417,000 (or $625,500 in Alaska, Guam, Hawaii, and the Virgin Islands).
