Conventional Loans

Conforming Loans:
Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community.

The Federal Housing Finance Agency (FHFA) publishes annual conforming loan limits that apply to all conventional mortgages delivered to Fannie Mae, including general loan limits and the high-cost area loan limits. High-cost area loan limits vary by geographic location

General Loan Limits for 2017
The general loan limits for 2017 have increased and apply to loans delivered to Fannie Mae in 2017

Maximum Original Principal Balance for 2017
Units Contiguous States, District of Columbia, and Puerto Rico
1 $424,100
2 $543,000
3 $656,350
4 $815,650

Maximum Loan Limits for High-Cost Areas for Mortgages Acquired in Calendar Year 2017
All but 87 counties (or county equivalents) will see a loan limit increase.

Units Contiguous States, District of Columbia+
1 $636,150
2 $814,500
3 $984,525
4 $1,223,475

Buying back mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market – effectively decreasing the demand for non-conforming loans.