Conforming Loans:

Conforming loans are conventional loans that meet loan limit and guidelines set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, from October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price.

Buying mortgage loans allow these agencies to provide a continuous flow of affordable funding to banks that reinvest their money back into more mortgage loans. Fannie Mae and Freddie Mac only buy loans that are conforming, to repackage into the secondary market - effectively decreasing the demand for non-conforming loans.

2008 Conforming Loan Limits:

Number of Units	Maximum original principal balance	Alaska, Guam, Hawaii, and U.S. Virgin Islands only
1	$417,000	$625,500
2	$533,850	$800,775
3	$645,300	$967,950
4	$801,950	$1,202,925

 

NOTE:  The conforming loan limits have been temporary increased to $729,750 for area determined to be high-cost. Most of the Washington Metro Area is considered high-cost. Contact Homestead Mortgage, L.C. at 703-352-3295 to determine if your area is high-cost. The temporary increase expires on December 31, 2008.

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