Conforming loans are conventional loans that meet bank-funding criteria set by Fannie Mae (FNMA) and Freddie Mac (FHLMC). 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:
|Number of Units||Maximum original principal balance||Alaska, Guam, Hawaii, and U.S. Virgin Islands only|
NOTE: The conforming loan limit in Alaska, Hawaii, Guam and the Virgin Islands is 50% higher.
Items required (for most loans);
- Last two months’ bank statements
- Most recent investment account statements
- Pay stubs for last 30 days
- W-2s and 1099s for last two years
- Last two years’ tax returns
- Real estate owned and rents collected
- Copy of settlement statement if you
- sold property in the last three years
- Purchase contract for new home
- (if you have one)