A conforming loan is a mortgage that meets Fannie Mae and Freddie Mac purchase limits — for 2026, $806,500 in most US counties (higher in high-cost areas). Conforming loans typically have the lowest available mortgage rates because Fannie/Freddie buy them, providing liquidity to lenders.
Conforming loans 'conform' to Fannie Mae / Freddie Mac (the GSEs — Government-Sponsored Enterprises) underwriting and size standards. The GSEs buy these loans from originating lenders, packaging them into mortgage-backed securities sold to investors. This secondary-market demand keeps conforming loan rates the lowest available. 2026 limits: $806,500 in most US counties (the 'baseline' conforming limit), higher in 'high-cost areas' (parts of California, NYC, Hawaii, Washington DC metro) where the limit goes up to $1,209,750. The Federal Housing Finance Agency (FHFA) announces new limits annually based on home-price changes — current limits at fhfa.gov/data/conforming-loan-limits (https://www.fhfa.gov/data/conforming-loan-limits). Loans above the conforming limit are 'jumbo loans' — held on the lender's balance sheet, requiring stronger borrower profiles (typically 720+ FICO, 20%+ down) and historically priced 15-50 bps higher than conforming. In 2026, jumbo pricing has narrowed and sometimes runs below conforming for prime borrowers at top jumbo lenders. Within conforming, there are subcategories: 'super conforming' (above baseline but below the high-cost-area limit) and standard conforming. Most lenders price these consistently. The CFPB's home buying guide (https://www.consumerfinance.gov/owning-a-home/) explains conforming versus non-conforming loan products and how loan limits affect buyers in high-cost markets.
Fannie Mae and Freddie Mac buy conforming loans from originating lenders and package them into MBS sold to institutional investors. This secondary-market demand creates liquidity that keeps rates low. Jumbo loans stay on the lender's balance sheet (more capital tied up = higher rates required).
$806,500 in most US counties for single-family homes (baseline). Higher in high-cost areas — up to $1,209,750 in parts of California, NYC, Hawaii, and the DC metro. FHFA publishes the official list of high-cost counties annually.