What Is a Conforming Loan When Buying a House?
Learn what a conforming loan is, how it works, and why it matters when buying a home. Includes 2025 loan limits and expert guidance.
If you’re buying a home and exploring mortgage options, you may come across the term conforming loan. It sounds technical, but this type of mortgage plays a major role in how most people finance their homes.
A conforming loan is a type of mortgage that meets certain guidelines set by the federal government. These standards make it easier for lenders to offer loans with lower rates and more flexible terms. If you’re looking for a conventional loan that offers wide availability and competitive pricing, there’s a good chance you’re looking at a conforming loan.
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What is a conforming loan?
A conforming loan is a mortgage that meets the underwriting guidelines of Fannie Mae and Freddie Mac, two government-sponsored enterprises (GSEs) that buy loans from lenders. These guidelines include requirements related to:
- Loan size: Must fall within FHFA loan limits
- Credit score: Minimums typically start around 620
- Down payment: Often 3%–5%, depending on the program
- Debt-to-income ratio: Generally no higher than 43%
Because conforming loans follow these standardized rules, lenders are often able to sell them on the secondary market, which lowers their risk. In turn, that can result in lower interest rates and more flexible lending terms for borrowers.
