A conventional loan is a type of mortgage offered by private lenders, like Freedom Mortgage, without government backing. Borrowers must meet credit score, income, and other financial requirements in order to qualify for a conventional loan.
What is the maximum conventional loan limit for 2021?
Conventional loans with limits on the amount of money you can borrow are often called “conforming” loans. In 2021, the maximum conventional conforming loan limit for a single family home is $548,250. Certain high cost areas may have higher limits.
Conventional loans typically have requirements you will need to meet to get your application approved including:
- A minimum 620 credit score
- A low debt-to-income ratio
- Proof of consistent income
You usually need to pay for private mortgage insurance (PMI) when you buy a home with a conventional loan if you make a down payment of less than 20%. You’ll likely need money to pay for closing costs too.
Conforming vs. Non-Conforming loans
You may be able to borrow more than the conventional loan limit of $548,250 to buy a house if you can get approved for a "non-conforming" loan. These are also called jumbo loans because they can exceed the conventional loan limit.
Jumbo loans often have stricter requirements than conforming conventional loans because they can involve higher risk for the lender. Lenders may require you to have a higher credit score, make a larger down payment, or have more assets before they will approve your application for a jumbo loan.
How often do conventional loan limits change?
Conventional loan limits are generally reviewed every year and can change based on the average price of homes in the United States. The Federal Housing Finance Agency (FHFA) sets these conventional loan limits for each calendar year and usually announces changes a month or two before they take effect.
Talk to Freedom Mortgage about buying houses
Ask Freedom Mortgage how much money you may be able to borrow to buy a house with a conventional loan. We can also help you buy homes with VA, FHA, and USDA loans. Would you like to learn more about your mortgage options? Call 877-220-5533 to speak to a Freedom Mortgage Loan Advisor or visit our Get Started page.