Definition - What does Conforming Loan mean?
A conforming loan is a loan that conforms to certain size criteria. This criteria is determined by Fannie Mae and Freddie Mac. The size of the loan must meet the requirements. Other details of the loan must meet the Fannie Mae and Freddie Mac requirements as well. For example, the debt to income ratio of the borrower must be a certain amount.
Justipedia explains Conforming Loan
The typical limit for conforming loans is $417,000. This number is used for mortgages. So, a person who takes out a mortgage loan for more than this amount would be taking out a non-conforming loan. The conforming loan limit is set every year to account for changing circumstances in the real estate and banking markets. The Office of Federal Housing Enterprise Oversight is also involved in regulating conforming loan limits, and it oversees Fannie Mae and Freddie Mac.