Conforming loans are mortgages that meet the requirements to be purchased by Fannie Mae or Freddie Mac. These loans are the most common type of home loan, and you’ll find that most lenders offer them.
Back in the early 1970s, the conforming loan limit was just $33,000. Now, half a century later, the limit is $766,550.
What is a conforming loan?
A conforming loan meets Fannie Mae and Freddie Mac’s requirements for residential mortgages. Borrowers must have a:
- Down payment of at least 3%
- Debt-to-income (DTI) ratio no higher than 45%
- Credit score of at least 620
Keep in mind: These are only minimums. To qualify for a loan, lenders will generally expect you to be stronger in one area to offset any weaker ones. For example, to secure a Fannie Mae-backed conforming conventional mortgage with a down payment of 3%, you might need a credit score of at least 680 and a DTI no higher than 36%.
In most parts of the country, borrowers also must be looking to borrow no more than $766,550 for a single-family home.
The Federal Housing Finance Agency (FHFA) sets the loan limits for conforming loans each year based on housing prices. Fannie and Freddie can’t buy home loans that exceed these limits.
Use our home affordability calculator to determine how much you can afford.
Conforming loans vs. conventional loans
Conforming loans are frequently confused with conventional loans, but the two terms aren’t interchangeable:
- A conventional loan is any mortgage that doesn’t provide a government guarantee to compensate the lender if the borrower defaults.
- A conforming loan is a type of conventional loan.
Read More: 5 Types of Mortgage Loans: Which One Is for You?
Conforming loans vs. non-conforming loans
Conventional loans that don’t fall within the loan limits set by the FHFA are referred to as “non-conforming.” These high-value conventional loans are commonly called jumbo loans.
A jumbo loan is a particular type of non-conforming loan. Conventional loans that don’t meet Fannie Mae and Freddie Mac’s other guidelines are considered non-conforming.
Good to know: Government-backed loans, such as FHA and VA loans, are also non-conforming. FHA loans allow borrowers to have credit scores as low as 500 when they put down 10%, for example, whereas conforming loans don’t allow credit scores below 620, even with larger down payments.
Requirements to qualify for a conforming loan
Remember: If you’re at or near one of the above limits, you’ll generally have to be stronger in other areas to compensate. Plus, lenders can set their criteria that are stricter than Fannie and Freddie’s. To improve your chances of qualifying for a loan, focus on boosting your credit score and making as large of a down payment as possible.
Find Out: How to Get the Best Mortgage Rates
Conforming loan limits for 2024
The conforming loan limit for 2024 is $766,550 for a single-family home in most areas. However, you may be able to borrow as much as $1,149,825 in areas with high home values, such as Hawaii and parts of California and New York.
Tip: You can check the conforming loan limit in your county using this FHFA map.
The FHFA reevaluates the conforming loan limit every year to keep it in line with national average home prices. For example, from 2023 to 2024, the limit increased 5.5% to reflect year-over-year changes in a seasonally adjusted housing price index.
Check Out: How to Buy a House: Step-by-Step Guide
Is a conforming loan right for you?
Conforming loans have several advantages:
- They offer low interest rates to borrowers with good credit.
- They’re widely available and easy to shop for. Most lenders offer conforming loans, except some lenders that specialize in government-backed loans, jumbo loans, or portfolio loans. Since they’re widely available, qualified borrowers will have an easy time comparing offers from different lenders to get a good deal.
- Their standardized requirements make them easy to understand. No matter which lender you get a conforming loan from, the basic requirements will be the same — though, as we mentioned earlier, some lenders might impose stricter requirements, like a higher minimum credit score.
