Conforming loan

In the United States, a conforming loan is a mortgage loan that conforms to GSE (Fannie Mae and Freddie Mac) guidelines.[1] The most well-known guideline is the size of the loan, which, for 2019, was generally limited to $484,350 for single family homes in the continental US.[2] Other guidelines include borrower's loan-to-value ratio (i.e. the size of down payment), debt-to-income ratio, credit score and history, documentation requirements, etc.[3]

In general, any loan that does not meet guidelines is a non-conforming loan. A loan that does not meet guidelines specifically because the loan amount exceeds the guideline limits is known as a jumbo loan.[1]

History

Starting in 1970, Fannie Mae was authorized by the United States Government to purchase residential mortgage loans. Fannie Mae worked with Freddie Mac to develop uniform mortgage documents and national standards for what would come to be known as a conforming loan.[1]

Importance

Fannie Mae and Freddie Mac are continuously in the market for conforming loans; because of this, conforming loans benefit from greater liquidity than non-conforming loans.[1]

Criteria

The Federal Housing Finance Agency (FHFA) publishes annual conforming loan limits that dictates the mortgages that Fannie Mae and Freddie Mac can buy.[4] The maximum loan amount is set based on the October-to-October changes in median home price, above which a mortgage is considered a jumbo loan, and typically has higher rates associated with it. This is because both Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market, making the demand for a non-conforming loan much less. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent.)

A temporary increase in the Conforming Loan Limits for high-cost areas of living was incorporated into the 2008 economic stimulus package. Congress authorized an increase of the single family residences limits to the lesser of $729,750 or 125% of the median home value within a metropolitan statistical area (MSA). The new Jumbo-Conforming program was adopted by Fannie Mae and Freddie Mac effective from April 1, 2008 until December 31, 2010.[5] The bill was signed into law by President Bush on February 13, 2008,[6] but the new rates were not being honored by any lenders (as of March 30, 2015).

The general loan limits for 2017 increased and apply to loans delivered to Fannie Mae in 2017 (even if originated prior to 1/1/2017). This was the first time the base loan limits had increased since 2006. 2018 and 2019 saw a further increase.[2]

Conforming Loan Limits

Per Fannie Mae:[7][8][9][10]

YearHistorical Conventional Loan LimitsHigh Cost Area*
Single FamilyTwo FamilyThree FamilyFour FamilySecond LoanSingle Family
2020 $ 510,400 $ 653,550 $ 789,950 $ 981,700 $ 765,600
2019 $ 484,350 $ 620,200 $ 749,650 $ 931,600 $ 242,175 $ 726,525
2018$ 453,100$ 580,150$ 701,250$ 871,450$ 226,550$ 679,650
2017$ 424,100$ 543,000$ 656,350$ 815,650$ 208,500$ 636,150
2016$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2015$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2014$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2013$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2012$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2011$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2010$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2009$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2008$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2007$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2006$ 417,000$ 533,850$ 645,300$ 801,950$ 208,500$ 625,500
2005$ 359,650$ 460,400$ 556,500$ 691,600$ 179,825$ 539,475
2004$ 333,700$ 427,150$ 516,300$ 641,650$ 166,850$ 500,550
2003$ 322,700$ 413,100$ 499,300$ 620,500$ 161,350$ 484,050
2002$ 300,700$ 384,900$ 465,200$ 578,150$ 150,350$ 451,050
2001$ 275,000$ 351,950$ 425,400$ 528,700$ 137,500$ 412,500
2000$ 252,700$ 323,400$ 390,900$ 485,800$ 126,350$ 379,050
1999$ 240,000$ 307,100$ 371,200$ 461,350$ 120,000$ 360,000
1998$ 227,150$ 290,650$ 351,300$ 436,600$ 113,575$ 340,725
1997$ 214,600$ 274,550$ 331,850$ 412,450$ 107,300$ 321,900
1996$ 207,000$ 264,750$ 320,050$ 397,800$ 103,500$ 310,500
1995$ 203,150$ 259,850$ 314,100$ 390,400$ 101,575$ 304,725
1994$ 203,150$ 259,850$ 314,100$ 390,400$ 101,575$ 304,725
1993$ 203,150$ 259,850$ 314,100$ 390,400$ 101,575$ 304,725
1992$ 202,300$ 258,800$ 312,800$ 388,800$ 101,150$ 303,450
1991$ 191,250$ 244,650$ 295,650$ 367,500$ 95,625$ 286,875
1990$ 187,450$ 239,750$ 289,750$ 360,150$ 93,725$ 281,175
1989$ 187,600$ 239,950$ 290,000$ 360,450$ 93,800$ 281,400
1988$ 168,700$ 215,800$ 260,800$ 324,150$ 84,350$ 253,050
1987$ 153,100$ 195,850$ 236,650$ 294,150$ 76,550$ 229,650
1986$ 133,250$ 170,450$ 205,950$ 256,000$ 66,625$ 199,875
1985$ 115,300$ 147,500$ 178,200$ 221,500$ 57,650$ 172,950
1984$ 114,000$ 145,800$ 176,100$ 218,900$ 57,000$ 171,000
1983$ 108,300$ 138,500$ 167,200$ 207,900$ 108,300$ 162,450
1982$ 107,000$ 136,800$ 165,100$ 205,300$ 107,000$ 160,500
1981$ 98,500$ 126,000$ 152,000$ 189,000$ 98,500$ 147,750
1980$ 93,750$ 120,000$ 145,000$ 180,000N/A$ 140,625
Limits for Alaska, Hawaii, Virgin Islands and Guam are 50% higher. Virgin Islands was designated a high cost area in 1992 and Guam in 2001.

Prior to 1984, second mortgage limits were the same as first mortgage limits. Subsequent legislation reduced the limits to 50% of first mortgage limits. Fannie Mae had no second mortgage program before 1981.

*Counties considered a High Cost Area are listed below:[11]

STATE COUNTY
AK ALEUTIANS EAST
AK ALEUTIANS WEST
AK ANCHORAGE
AK BETHEL
AK BRISTOL BAY
AK DENALI
AK DILLINGHAM
AK FAIRBANKS NORTH
AK HAINES
AK HOONAH-ANGOON
AK JUNEAU
AK KENAI PENINSULA
AK KETCHIKAN GATEWAY
AK KODIAK ISLAND
AK KUSILVAK CENSUS AREA
AK LAKE AND PENINSULA
AK MATANUSKA-SUSITNA
AK NOME
AK NORTH SLOPE
AK NORTHWEST ARCTIC
AK PETERSBURG CENSUS AREA
AK PRINCE OF WALES-HYDER
AK SITKA
AK SKAGWAY MUNICIPALITY
AK SOUTHEAST FAIRBANKS
AK VALDEZ-CORDOVA
AK WRANGELL
AK CITY/BOROUGH
AK YAKUTAT CITY
AK YUKON-KOYUKUK
CA ALAMEDA
CA ALPINE
CA CONTRA COSTA
CA EL DORADO
CA LOS ANGELES
CA MARIN
CA MONO
CA MONTEREY
CA NAPA
CA NEVADA
CA ORANGE
CA PLACER
CA SACRAMENTO
CA SAN BENITO
CA SAN DIEGO
CA SAN FRANCISCO
CA SAN LUIS OBISPO
CA SAN MATEO
CA SANTA BARBARA
CA SANTA CLARA
CA SANTA CRUZ
CA SOLANO
CA SONOMA
CA VENTURA
CA YOLO
CO ADAMS
CO ARAPAHOE
CO BOULDER
CO BROOMFIELD
CO CLEAR CREEK
CO DENVER
CO DOUGLAS
CO EAGLE
CO ELBERT
CO GARFIELD
CO GILPIN
CO HINSDALE
CO JEFFERSON
CO LAKE
CO OURAY
CO PARK
CO PITKIN
CO ROUTT
CO SAN MIGUEL
CO SUMMIT
CT FAIRFIELD
DC DISTRICT OF COLUMBIA
FL COLLIER
FL MONROE
GA GREENE
GU GUAM
HI HAWAII
HI HONOLULU
HI KALAWAO
HI KAUAI
HI MAUI
ID BLAINE
ID CAMAS
ID LINCOLN
ID TETON
MA BRISTOL
MA DUKES
MA ESSEX
MA MIDDLESEX
MA NANTUCKET
MA NORFOLK
MA PLYMOUTH
MA SUFFOLK
MD ANNE ARUNDEL
MD BALTIMORE
MD BALTIMORE CITY
MD CALVERT
MD CARROLL
MD CHARLES
MD FREDERICK
MD HARFORD
MD HOWARD
MD MONTGOMERY
MD PRINCE GEORGE'S
MD QUEEN ANNE'S
MP NORTHERN ISLAND
MP SAIPAN
MP TINIAN
NC CAMDEN
NC CURRITUCK
NC GATES
NC HYDE
NC PASQUOTANK
NC PERQUIMANS
NE LINCOLN
NE LOGAN
NE MCPHERSON
NH ROCKINGHAM
NH STRAFFORD
NJ BERGEN
NJ ESSEX
NJ HUDSON
NJ HUNTERDON
NJ MIDDLESEX
NJ MONMOUTH
NJ MORRIS
NJ OCEAN
NJ PASSAIC
NJ SOMERSET
NJ SUSSEX
NJ UNION
NY BRONX
NY DUTCHESS
NY KINGS
NY NASSAU
NY NEW YORK
NY ORANGE
NY PUTNAM
NY QUEENS
NY RICHMOND
NY ROCKLAND
NY SUFFOLK
NY WESTCHESTER
PA PIKE
RI BRISTOL
RI KENT
RI NEWPORT
RI PROVIDENCE
RI WASHINGTON
TN CANNON
TN CHEATHAM
TN DAVIDSON
TN DICKSON
TN HICKMAN
TN MACON
TN MAURY
TN ROBERTSON
TN RUTHERFORD
TN SMITH
TN SUMNER
TN TROUSDALE
TN WILLIAMSON
TN WILSON
UT SALT LAKE
UT SUMMIT
UT TOOELE
VA ALBEMARLE
VA ALEXANDRIA
VA AMELIA
VA ARLINGTON
VA BUCKINGHAM
VA CAROLINE
VA CHARLES CITY
VA CHARLOTTESVILLE
VA CHESAPEAKE
VA CHESTERFIELD
VA CLARKE
VA COLONIAL HEIGHTS
VA CULPEPER
VA CUMBERLAND
VA DINWIDDIE
VA FAIRFAX
VA FAIRFAX INDEPENDENT CITY
VA FALLS CHURCH
VA FAUQUIER
VA FLUVANNA
VA FREDERICKSBURG
VA GLOUCESTER
VA GOOCHLAND
VA GREENE
VA HAMPTON
VA HANOVER
VA HENRICO
VA HOPEWELL
VA ISLE OF WIGHT
VA JAMES CITY
VA KING AND QUEEN
VA KING WILLIAM
VA LANCASTER
VA LOUDOUN
VA LOUISA
VA MANASSAS
VA MANASSAS PARK
VA MATHEWS
VA NELSON
VA NEW KENT
VA NEWPORT NEWS
VA NORFOLK
VA PETERSBURG
VA POQUOSON
VA PORTSMOUTH
VA POWHATAN
VA PRINCE GEORGE
VA PRINCE WILLIAM
VA RAPPAHANNOCK
VA RICHMOND INDEPENDENT CITY
VA SPOTSYLVANIA
VA STAFFORD
VA SUFFOLK
VA SURRY
VA SUSSEX
VA VIRGINIA BEACH
VA WARREN
VA WILLIAMSBURG
VA YORK
VI ST. CROIX
VI ST. JOHN
VI ST. THOMAS
WA KING
WA PIERCE
WA SAN JUAN
WA SNOHOMISH
WV JEFFERSON
WY TETON

References
  1. Wiedemer, John (2001). Real Estate Finance, 8th Edition. Prentice Hall. pp. 44, 78–86.
  2. "FHFA Announces Maximum Conforming Loan Limits for 2018". Federal Housing Finance Agency. 28 November 2017. Retrieved 25 May 2018.
  3. "Mortgage Tools - Conforming Loan Limits". Zillow. Retrieved 21 September 2013.
  4. http://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx
  6. Bush, House Hammer Out $150 Billion Stimulus Bill(2008), Washington Post
  7. Historical Conventional Loan Limits, Fannie Mae, Last updated 2011-12-31. (.pdf, 23KB, 1 page)
  8. Loan Limits for Conventional Mortgages, Fannie Mae, Last updated 2016-07-01.
  9. Loan Limits for Conventional Mortgages, Fannie Mae, Last updated 2017-04-19.
  10. Loan Limits for Conventional Mortgages, Fannie Mae, Last updated 2019-12-09.
  11. Harris, Shiva. "VA Loan Limits for High-Cost Counties: Updated for 2017". Military.com. Retrieved 2017-07-21.
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