Conforming Loan is a mortgage loan that can be purchased or guaranteed by Fannie Mae or Freddie Mac and which restricts the maximum loan amount to the conforming loan limits set by Federal Housing Finance Agency (FHFA).
There is a ready market for the conforming loans and they carry the lowest risk to the lender. As a result, interest rates on conforming loans are lower than the interest rates on non-conforming loans.
The conforming loan limit determines the maximum size of a mortgage loan than a Government Sponsored Entity (Fannie Mae or Freddie Mac) can purchase or guarantee. The current conforming loan limits are in the range of $417,000 to $801,950. See Conforming Loan Limit web page for details for conforming loan limits.
Updated: Jul 07, 2011