Loan Options for Buying or Refinancing a Home:
Conventional Loans

Conforming Loans

Conforming loans make up the majority of conventional loans and when people talk of conventional loans they are usually referring to conforming loans. These mortgages are called conforming loans because they conform to underwriting guidelines and limits set by Fannie Mae and Freddie Mac. In most U.S. counties, the conforming loan limit is $510,400. However, in some high-cost counties the limit is higher. In Los Angeles, New York City, San Francisco, Washington, D.C., and the entire state of Alaska, for example, the limit is $765,600.

Terms and rates

Most conforming loans are offered at fixed-rates for terms of either 10, 15, 20, or 30 years. It is not uncommon, however, for homebuyers to get a 20- or 30-year fixed-rate mortgage and then decide to refinance at a different rate within 10 years. Loan rates themselves are set by the lenders and are influenced by a number of factors, including the Consumer Price Index, home sales, inflation, the Federal Reserve Interest Rate, and the GDP. In general, if the economy is doing well then interest rates will rise; if it is doing poorly, then they will fall. While lenders determine their own mortgage rates, Freddie Mac has maintained a weekly survey of average mortgage rates since 1971.

Types of Loans