Conforming Loan Limit

Each year, the Federal Housing Finance Agency (FHFA) compares the increase or decrease in the average house price from October to October as indicated by the Housing Price Index. When I started doing mortgages in 1984, the maximum conforming loan was $114,000. Over the next 20 years it slowly mostly went up. Then, in 2006, it went to $417,000 and stayed there for ten years. Finally, in 2017, the conforming limit started going up again. It is currently $766,550, but it will go to $802,650 in the next few weeks.

Conforming Loans

Why is this important? Conforming loans are mortgages that meet criteria set by the FHFA. This means that they are eligible to be purchased by Fannie Mae and Freddie Mac. These loans have set limits and guidelines. Because they can be purchased by Fannie and Freddie, the rates on these mortgages are almost always better than non-conforming loans. Also, conforming mortgages usually allow higher loan-to-values, so less money down than non-conforming mortgages.

Since we live in such an expensive housing market, higher limits on conforming loans help with affordability by allowing more borrowers to get these loans. Feel free to contact us with questions about conforming loans or for other help with your mortgage needs.