A conforming mortgage is one that, literally, conforms to the mortgage guidelines as set forth by Fannie Mae and Freddie Mac.
Conforming mortgage guidelines are Fannie’s and Freddie’s eligibility standards; an underwriter’s series of check-boxes to determine whether a given loan should be approved.
Among the many traits of a conforming mortgage is “loan size”.
Each year, the government re-assesses its maximum allowable loan size based on “typical” housing costs nationwide. Loans that fall at, or below, this amount meet conforming mortgage guidelines. Loans in excess of this limit are known as “jumbo” loans.
Between 1980 and 2006, as home values increased, conforming loan limits did, too, rising from $93,750 to $417,000. Since 2006, however, despite falling home prices in many U.S. markets, the conforming loan limit has held steady. This will remain true for 2012 as well.
In 2012, for the 7th straight year, the national, single-family conforming mortgage loan limit will remain at $417,000.
The complete 2012 conforming loan limit breakdown, by property type :
- 1-unit properties : $417,000
- 2-unit properties : $533,850
- 3-unit properties : $645,300
- 4-unit properties : $801,950
However, there are some areas nationally that have earned “loan limit exceptions” based on the local median sales prices. These areas are known as “high-cost” areas and loan limits within these regions range from $417,001 to a maximum of $625,500.
Some examples of high-cost areas include San Francisco (along with a most of California), New York City, and most of Hawaii and Alaska. Nationally, there are approximately 200 such “high-cost” areas.
Verify your local conforming loan limit and loan limits across New York via the Fannie Mae website. A complete county-by-county list is published online.