What are Conforming Loans?
- Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae and Freddie Mac. Both of these stock-holding companies buy mortgage loans from lending institutions and secure them for resale to the investment community. Every year, form October to October, Fannie Mae and Freddie Mac establish limits on what constitutes a conforming loan in a mean home price. Buying back 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.
Conforming Loan Limits for 2023
Number of Units The maximum original principal balance Alaska, Guam, Hawaii, and U.S. Virgin Islands only 1 $726,200 $1,089,300 2 $929,950 $1,394,775 3 $1,123,900 $1,685,850 4 $1,396,800 $2,095,200
NOTE: Generally the debt to income ration can’t exceed 45% on this product, but with a strong borrower profile can go up to 49.99 with strong credit and reserves.
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