Conforming loans have conditions and terms that comply with tips dictated by Fannie Mae and Freddie Mac, (shorthand for the Federal nationwide Mortgage Association plus the Federal Home Loan Mortgage Corporation, correspondingly). Both of these businesses buy home mortgages from loan providers then bundle them into securities and offer them to investors.

Fannie Mae and Freddie Mac instructions establish specific requirements such as:

• The utmost loan amount
• Borrower income
• Credit standards
• The advance payment essential to obtain mortgage loan

Loans which can be over the maximum loan amount established by Fannie Mae and Freddie Mac directions are known as non-conforming loans, and tend to be also referred to as Jumbo loans. These loans are distributed on a smaller sized scale and possess greater interest levels than regular loans that are conforming. Continue reading →