finance

conforming loan

A conforming loan is a conventional mortgage that meets the underwriting guidelines and maximum loan limits set by Fannie Mae and Freddie Mac, allowing it to be sold to them in the secondary market. Standards include credit scores, debt-to-income ratios, documentation, and loan amount. Loans above the limit are called jumbo loans and are nonconforming. Conforming limits are adjusted annually and are higher in high-cost areas.

Exam tip: Conforming relates to Fannie/Freddie standards, not to government backing. FHA and VA loans are government loans, not conforming conventional loans.
Example: A buyer gets a $450,000 conventional loan that fits under the current county loan limit and meets Fannie Mae guidelines, making it conforming.

1. A conventional loan that exceeds the conforming loan limits set by the FHFA is called a:

Answer & explanation

Answer: B. Loans above the conforming limits cannot be sold to Fannie Mae/Freddie Mac and are non-conforming 'jumbo' loans, usually at higher rates.

Related terms & state variants

conventional loan Fannie Mae Freddie Mac jumbo loan nonconforming loan

Sources

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Last verified: 2026-10-23