Conforming Loans

This product offers more buying power to homeowners when shopping for a new home.

A conforming loan is a mortgage that meets the criteria set forth by Fannie Mae and Freddie Mac, two government-sponsored entities that purchase mortgages from lenders. These criteria include loan amount limits, borrower credit scores, and debt-to-income ratios. In general, conforming loans are easier to obtain and come with more favorable terms than non-conforming loans.

Loan amount limits

One of the key criteria for a conforming loan is the loan amount limit. In most parts of the country, the limit is $548,250 for a single-family home. However, in certain high-cost areas, the limit can be as high as $822,375. If you need to borrow more than the conforming loan limit, you may need to consider a jumbo loan, which typically comes with stricter eligibility requirements and higher interest rates.

Borrower credit scores

Another important criterion for a conforming loan is the borrower’s credit score. Generally, borrowers need a credit score of at least 620 to qualify for a conforming loan. However, the higher your credit score, the better terms you may be able to obtain, such as lower interest rates and down payment requirements.

Debt-to-income ratio

Your debt-to-income (DTI) ratio is another important factor that lenders consider when determining your eligibility for a conforming loan. Your DTI ratio is your total monthly debt payments divided by your gross monthly income. Generally, lenders prefer a DTI ratio of 43% or lower for conforming loans, although some may allow higher ratios in certain circumstances.

Benefits of a conforming loan

Conforming loans offer several benefits over non-conforming loans, including:

  • Lower interest rates: Because conforming loans are backed by Fannie Mae and Freddie Mac, lenders can offer lower interest rates than they can for non-conforming loans.
  • Easier qualification: Conforming loans typically have less stringent eligibility requirements than non-conforming loans, making them easier to obtain.
  • More options: Because conforming loans are so common, there are a wide variety of lenders and loan products available, giving borrowers more options to choose from.

If you’re interested in learning more about conforming loans, our mortgage brokers are here to help. We can walk you through the eligibility requirements, loan amount limits, and other criteria you need to know to determine whether a conforming loan is right for you. Click here to contact us or call (561) 717-6826 for a quote.

Additional restrictions may apply. Please inquire. All loans are subject to credit approval.