Conforming Loan Limits and Why They Matter

Every year things seem to get more and more expensive, but thankfully, the Federal Housing Financing Agency, or FHFA, reflects that in the conforming loan limits.


Who are Fannie Mae and Freddie Mac?

Fannie Mae and Freddie Mac are two federally created and backed mortgage companies that purchase mortgages from lenders. 5 of the 18 members of the board of directors are appointed by the President of the United States. FHFA regulates the capital standards and the investment portfolio. The Department of Housing and Urban Development (HUD) is in charge of the general housing missions.


What is the Conforming Loan Limit?

The conforming loan limit is the maximum amount that will be purchased and then bundled into mortgage-backed securities by federal lenders. This process allows the lenders to have funds to originate more loans. Fannie Mae and Freddie Mac are restricted to purchasing mortgages below the conforming loan limit.

The conforming loan limit is higher in high-cost areas to reflect the economic status of the county. Homes do not cost the same in Manhattan, New York, and rural Arkansas. It is based on the median costs of the homes in the area.

The amount varies by county and by the unit of the household. The FHFA announces the new limit each year to reflect the change in the economy. To see the current conforming loan limit for your area, click here or consult with your home loan advisor.


Can I Borrow More Than the Limit?

A non-conforming loan is one that does not meet Fannie Mae and Freddie Mac’s standards. It is typically more than the conforming loan limit and is a considered jumbo loan. If you are considering a jumbo loan, you will want a mortgage company that knows how to do them, like JTS & Co.


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If you are looking to get a mortgage, small or large, JTS & Co. can help you achieve your dreams. Contact us today to take the first step on your homeownership journey with one of our licensed mortgage professionals alongside you!