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A conforming loan is any mortgage that meets the standards for purchase and sale by the government-sponsored Fannie Mae & Freddie Mac.

What Are Conforming Loan Limits?

Basically, a conforming loan is a home loan whose amount doesn’t exceed a certain dollar amount. That dollar amount is determined each year by the FHFA. The national conforming loan limit for 2022 is $647,200. However, in many high-cost areas, there is simply no housing to be had at the upper limit. In these high-cost areas, the limit is $970,800.

For a conventional loan to be considered a conforming loan, the loan amount must be lower than the limit set by the FHFA.

Other Criteria For A Conforming Loan

Though loan size is a big part of determining what is and isn’t a conforming loan, there are other guidelines Fannie Mae and Freddie Mac have for the loans that they buy.

Single-Family Home

While many of us may think of a single-family home as being a home in which only one family lives, the FHFA does not. It defines a single-family home as any home with 1 – 4 units.

Ability To Repay

These guidelines include limits on acceptable credit scores, debt-to-income ratios (DTI) and loan-to-value ratios (LTV).

To qualify for a conforming loan, you’ll generally need a credit score of at least 620, a DTI below 50% and a maximum LTV of 97% (meaning you’ll need to put at least 3% down).

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