Conforming Loans Typically Cost Less

Due to the fact that these loans are eligible to be purchased by Fannie Mae or Freddie Mac, interest rates are typically lower than some government-backed programs. You can also expect to pay less money monthly and on interest in the long run if you are able to put 20% down and avoid private mortgage insurance.

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The Loan Limit Varies Depending on Location

The Federal Housing Finance Agency (FHFA) determines the maximum amount that conforming loans can’t exceed. For 2021, a single-family home qualifies for a conforming loan of up to $726,200 in most areas of the U.S. There are exceptions for areas with high costs of living, so check out the link below to see the loan limits in your area of the country.

See FHFA Loan Limits →

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Fixed or Adjustable Rate Options

With a fixed-rate loan, the interest stays the same over the life of the entire loan. You will make the same interest and principal payments every month. With an adjustable-rate mortgage (ARM), the interest remains the same during a set period of time (typically 5, 7, or 10 years). After that time, the rate could go up or down and the amounts owed each month can change with it.

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Conforming Loan FAQs

What is the difference between conforming and non-conforming loans?

Conforming loans meet Fannie Mae and Freddie Mac guidelines. Non-conforming loans do not. Those who qualify for a conforming loan can benefit from the lower interests rate. Those who qualify for non-conforming loans can benefit from borrowing more money compared to conforming loans.

What is a conforming loan amount?

A conforming loan is a home loan amount that does not exceed a certain dollar amount.

What is the maximum conforming loan limit?

For most borrowers in the U.S., the maximum conforming loan limit is $548,250. Jumbo loans are available for loans that exceed the conforming loan limit.

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