Conforming mortgages are loans that fall within the guidelines of Fannie Mae and Freddie Mac, the two largest financiers of home loans in the United States.
Conforming loans typically have the lowest interest rates, but also come with some of the toughest underwriting guidelines.
The Office of Federal Housing Enterprise Oversight sets maximum loan amounts for conforming loans, which are adjusted each year based on October-to-October changes in mean home price.
If the loan size exceeds the maximum set for conforming loans, it’s considered a jumbo loan, and must be sold to secondary investors other than Fannie and Freddie.
The graph below details the change in the conforming loan limits from 1980-2007. It’s amazing how quickly the conforming loan amount limit has risen in the last thirty years, and especially over the last ten:
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