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When you’re evaluating home loan categories, it’s easy to get confused by the
terms “conventional” and “conforming and non-conforming.” As similar as these
three terms may sound, their definitions are worlds apart, so it’s important to
understand the distinctions. We’re here to clear the air.
A conventional loan is a mortgage that adhere to Fannie Mae guidelines. Fannie Mae, or Federal
National Mortgage Association, is a corporation created by the federal government that buys and sells
conventional mortgages and also sets the maximum loan amount and requirements for borrowers.
A conforming loan, on the other hand, describes a certain set of characteristics contained within a
home loan. For example, a conventional loan can be either conforming or non-conforming.
Within the mortgage industry, loans are repackaged and sold on the secondary market to mortgage
investors, the biggest of which include the government-sponsored entities (GSEs), Fannie Mae and
Freddie Mac. When a pool of loans adheres to the standards of Fannie Mae and Freddie Mac, the loans
are considered “conforming.” When they do not, such as with jumbo loans, they are considered “non-
Let’s take a closer look at the differences of conforming and non-conforming loans, and how borrowers
can assess which home loan will benefit them most.
What Is a Conforming Loan?
In order for a mortgage loan to be conforming, it must meet the specific criteria that allow Fannie Mae
and Freddie Mac to purchase the loan. The most significant of these criteria is the loan limit, which
refers to the maximum amount of the loan that Fannie Mae or Freddie Mac will purchase. The loan limit
can change from year to year.
For the first time since 2006, the Federal Housing Finance Agency (FHFA) has increased the conforming
loan limit for a single-family, one-unit property—from $417,000 to $424,100. Since Fannie Mae and
Freddie Mac are managed by FHFA, they align with FHFA’s loan limits.
What Are the Benefits of a Conforming Loan?
The primary advantage of a conforming loan is that, for borrowers with excellent credit, they typically
offer lower interest rates, which means lower monthly mortgage payments and less money spent over
the life of the loan.
What Is a Non-Conforming Loan?
Non-conforming loans are loans that cannot be purchased by Fannie Mae or Freddie Mac. These types
of loans include jumbo loans. Jumbo loans exceed the conforming loan limits and have different
underwriting guidelines. Due to the higher risk of jumbo loans, they generally have less-favorable terms
and are more difficult to sell on the secondary market.
What Are the Benefits of a Non-Conforming Loan?
While riskier and less common than conforming loans, non-conforming loans allow individuals to
borrow larger amounts than is possible with a conforming loan.
You many have heard the term "jumbo loan" before. These include any loans above the conforming
limit of $424,100. 
Jumbo loans are usually geared toward high-income earners who have good credit and plentiful assets.
Due to the size of the loan, as well as the lack of government insurance, lenders assume greater risk
with these mortgages.
 Choosing the Home Loan Option That’s Best for You
As described above, the loan amount, a variety of other factors can dictate which loan type that you
qualify for.  However, there are times when the borrower has a choice.
To find out more information about the current loan limits and loan programs, contact us at 407-300-
2558 or click the button below to request a quote with rates and terms.
1st Florida Lending Corp., a registered Mortgage Lender Orlando servicing all of Florida offering over 48 loans programs including Conventional Loans, Non-Conforming Loans, FHA Loans, VA Loans, USDA Loan, Self-Employed Loans, Bank Statement Loans, No-Doc Loans, Reverse Mortgage Loans, ITIN Loans, Rental Investment Loans,   to name a few and specializing in Bank Statement Loans or “stated loans” requiring no Tax Return verification and much more.           Main Office: 2151 Consulate Dr. * Suite 8 *  Orlando, FL., 32837  * Telephone (800) 655-1345 * (407) 300-2558 * Fax (877) 401-9955 We are approved lenders for all Government Loans and registered with the Florida Office of Financial Regulation - # MLD106 When Banks Say No !  We Say YES !  ®  is a registered trademark owned by 1st Florida Lending Corp.
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Disclaimer:  All Loan programs, rates and terms can change without notice and are subject to credit and underwriting approval. We will always work hard to approve your loan.  There are no guarantees of any kind expressed or implied! © 2007 - 2018 1st Florida Lending Corp. - All rights reserved  I  Privacy Policy  I  Terms of Use  I