Conforming Loan: Definition, Limits, and Considerations

Understand Conforming Loans and What Sets Them Apart

Buying a home is one of the biggest financial decisions you’ll make. Understanding key terms can help you feel confident working with lenders and real estate agents. One such term you should know is “conforming loan,” the most common type of mortgage in the U.S.

What does “conforming loan” really mean? We’ll help you understand the ins and outs of a conforming loan, how this type of loan works and its limits, and weigh the benefits and drawbacks to see if it may be the right mortgage for you.

What Is a Conforming Loan and How Does It Work?

A conforming loan is a type of conventional mortgage loan that meets or “conforms” to the requirements established by the Federal Housing Finance Agency (FHFA), the government agency which oversees Fannie Mae and Freddie Mac. These guidelines include credit score, income, debts, and down payment requirements. Conforming loans can be either fixed-rate mortgages or adjustable-rate mortgages and are available in loan term lengths from 8-30 years, with the most common being 15- and 30-year mortgages.

The FHFA sets rules for conforming loans, including the maximum loan size allowed each year. Once a lender issues a conforming loan, it can be sold to Fannie Mae or Freddie Mac, two government-sponsored enterprises (also known as GSEs) that buy and bundle these loans into investments in the secondary mortgage market. This system helps to keep money flowing through the mortgage market so lenders can offer more loans to more borrowers.

Conforming Loans vs. Non-conforming Loans

A non-conforming loan typically refers to a mortgage that exceeds the limits set for conforming loans. When you want to finance a house for more money than these limits, you’ll typically have to apply for a jumbo loan.

A non-conforming loan may also mean that the mortgage doesn’t meet other credit, income, or financial standards required for conforming loans.

Conforming Loan Limits and Requirements

To qualify for a conforming loan, you should meet these standards when buying or refinancing a home:

• Loan limits: In 2025, the limit on conforming loans for most areas of the United States is $806,500. Certain high-cost areas have higher limits, which can range from $900,000 up to $1,209,750. Loan limits are typically set at the county level. To look up the 2025 limits in your county, see the FHFA’s loan limit map.
• Down payment: Conforming loans require a down payment of at least 3%, which could be higher depending on the loan type. Putting down a larger amount of 20% or more allows you to avoid private mortgage insurance (PMI) costs.
• Loan-to-value ratio (LTV): Conforming loans must stay within specific LTV limits—generally up to 97% for primary residences—set by Fannie Mae and Freddie Mac. LTV is related to your down payment amount and shows how much of your home’s price (assuming the home appraises for the sale price) is covered by the loan versus your own funds. LTV limits can be lower for investment properties and second homes.
• Credit score: You’ll need a credit score of at least 620 to qualify for a conforming loan. Check with your lender to confirm specific credit requirements.
• Debt-to-income ratio (DTI): You’ll typically need a maximum DTI of 43% to qualify, but this varies by the underwriting method, the lender, and other factors, such as if you have an excellent credit score.

What Types of Loans are Conforming Loans?

Conventional fixed-rate or adjustable-rate mortgages that meet guidelines set by the FHFA, Fannie Mae, and Freddie Mac are considered standard conforming loans. Conventional loans are any mortgages not insured or guaranteed by a government agency.

Government-backed loans, such as VA, USDA, and FHA loans, aren’t conforming loans, even if the loans are for similar amounts.

Standard vs. Super Conforming Loans

Conforming loan types vary by loan amount. Unlike standard conforming loans that meet the FHFA’s loan limits, super conforming loans refer to when the FHFA allows higher loan limits.

This happens in high-cost areas where home prices are more expensive than what standard FHFA limits accommodate. As discussed, in some counties, you can still get a conforming loan when the mortgage meets the higher limits of the local area. It’s important to note that super conforming loans are different than jumbo loans.

Conforming Loan Considerations

To know if a conforming loan is the best option for your homebuying journey, consider the benefits and limitations.

Conforming Loan Pros

Some potential advantages of conforming loans include:

• Lower interest rates: Lenders often prefer conforming loans because they’re eligible for purchase by Fannie Mae and Freddie Mac and frequently offer you lower mortgage rates than some non-conforming loans.
• Lower down payment: You may not have to worry about having a huge amount of savings for a large down payment, since conforming loan down payments can be as low as 3%.
• Easier qualification: Lenders are more flexible with conforming loans because, again, they can sell them to Fannie Mae or Freddie Mac. Standardized rules across lenders make it simpler for borrowers to qualify and compare offers.

Conforming Loan Cons

Potential disadvantages of conforming loans include:

• Loan limits: You won’t be able to borrow more than the FHFA’s conforming loan limit without a jumbo loan, which could be tricky if you live in a county with high home prices.
• Stricter credit requirements: Unlike some government-backed loans that often accept credit scores as low as 500, conforming loans require a score of 620 or higher.
• PMI: If you take advantage of the low down payments that typically come with conforming loans, you’ll likely have to pay for PMI until you reach 20% home equity in your home.

Conforming Loan FAQs

Want to know more about conforming loans? Here are answers to some common questions.

Are Conforming Loans and Conventional Loans the Same Thing?

No, they aren’t the same thing. All conforming loans are conventional loans. However, conventional mortgages can be either conforming or non-conforming, depending on their terms and conditions.

What’s the Minimum Down Payment for a Conforming Loan?

The minimum down payment for conforming loans is typically 3%, but the amount may vary depending on factors such as whether you live in a high-cost area, the loan program, and your personal financial situation.

How Often Do Conforming Loan Limits Change?

The FHFA annually reviews and adjusts conforming loan limits based on changes in average home prices. When home values rise, conforming loan limits usually increase to help keep pace with the market.

Final Thoughts: Conforming Loans for Homebuyers

Conforming loans remain the most popular choice for homebuyers because they offer flexible terms, competitive rates, and standardized rules that make borrowing feel more predictable.

To see how much money you can save with a conforming loan, get prequalified today to get your estimated personal rate and loan terms.

By Victoria Araj; Published on November 4th, 2025

Victoria Araj is the Senior Director, Managing Editor at Freedom Mortgage. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.