The national conforming loan limit for mortgages that finance single-family one-unit properties increased from $33,000 in the early 1970s to $417,000 for 2006-2008, with limits 50 percent higher for four statutorily-designated high cost areas: Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Since 2008, various legislative acts increased the loan limits in certain high-cost areas in the United States. While some of the legislative initiatives established temporary limits for loans originated in select time periods, a permanent formula was established under the Housing and Economic Recovery Act of 2008 (HERA). The 2015 loan limits have been set under the HERA formula.
The current conforming loan limit for a single-family home or condominium in most areas of the country is $417,000, with higher limits allowed for designated high-priced markets.
The term “conforming” is most often used when speaking specifically about a mortgage amount; however, the terms “conforming” and “conventional” are frequently used interchangeably. Mortgages that exceed the conforming loan limit are classified as non-conforming or jumbo mortgages.
Conforming (Conventional) loans with a combined loan to value over 80% must have Mortgage Insurance (MI). MI rates and loan interest rates for a conventional loan are based on your credit history, the type of property you are purchasing, and the amount of down payment.
Loan programs available for conventional loans include:
- Fixed rate mortgage (10, 15, 20, 25, 30 and 40 year terms)
- Interest Only mortgages (available in certain circumstances)
- Adjustable rate mortgages (3 year, 5 year, 7 year and 10 year fixed periods)