A conforming loan is a mortgage loan that fits into the regulations outlined by the government sponsored entities Fannie Mae and Freddie Mac (also known as FNMA FHLMC). One of these regulations puts a limit on the size of the loan, which in most cases is $424,100.
Any loan that is larger than the maximum loan amount as outlined by the government sponsored entities may be considered a Jumbo loan.
There are some exceptions to the rule however. There are certain areas of the country that have been deemed a high cost zone where the guidelines provide an exception to this value limit to provide available financing to these areas. Loan amounts over these conforming loan limits are deemed “Jumbo Loans.”
But what does it mean?
Because these Jumbo Loans aren’t conforming with the government sponsored entity guidelines, the funds come from pools of private investors. Because of this, there may be slightly different (sometimes a bit more restrictive) lending guidelines due to the limitations determined by the investors.
Speak with a mortgage professional today to find out which option is right for you.