Mortgage loans have been in existence for quite some time and the rules and regulations surrounding this type of lending have evolved quite a bit. Over time, banks and other financial institutions came to a consensus as to what the fundamental guidelines and standards of a home mortgage loan should be. Any mortgage that falls under this set of rules is known as a conforming mortgage loan.
Conforming Mortgage Rules
The criteria for a conforming mortgage include paperwork and documentation requirements, loan limits for different types of mortgages and other sundry guidelines. In general, however, when real estate industry professionals and lending professionals refer to a mortgage loan as a conforming loan, they are talking about its size: If the mortgage loan amount is over the limit set by the OFHEO then it is called a jumbo mortgage or a non-conforming mortgage.
The OFHEO and Conforming Mortgages
The specific characteristics of a conforming loan were set by the Office of Federal Housing Enterprise Oversight (OFHEO). Two very large home mortgage loan institutions, the Federal National Mortgage Association (very commonly referred to as Fannie Mae) and the Federal Home Loan Mortgage Corporation (Fannie Mae’s brother, Freddie Mac), played a big role in creating these guidelines.
If you’re thinking about buying a home and are wondering if you will qualify for a conforming loan, the answer will probably be “yes” if your credit is good. If it’s not, or if you need an unusually large loan, you might have to apply for a non-conforming loan instead.