Conforming Loans
Conforming loans represent home loans/mortgages
that meet specific underwriting guidelines as set forth by the Federal
National Mortgage Association (Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie Mac). Fannie Mae and Freddie
Mac are often referred to as agencies of the Federal government.
While this is true, understand that they are not government owned
and operated. In fact, they are both shareholder owned private corporations
which are actively traded on the New York Stock Exchange (NYSE)
under ticker symbols FNM (Fannie Mae) and FRE (Freddie Mac).
While Fannie Mae (1938) has historical roots that
are slightly different and slightly deeper than Freddie Mac (1970),
today they are considered to be very similar in the purpose. Both
were created by Congressional charter to direct their efforts to
stabilizing the mortgage market while increasing the availability
and affordability of homeownership to all classes of Americans.
Prior to the creation of Fannie Mae and Freddie Mac,
the mortgage industry consisted primarily of banking type institutions
making home loans to homeowners and servicing these loans until
they were paid off. The problem was that as an institution began
running out of available funds for lending, they would increase
their lending interest rate. This lead to widely fluctuating interest
rates both locally and nationally.
With the creation of Fannie Mae and Freddie Mac, these
mortgage originators (banking type institutions) were suddenly able
to replenish their available funds for lending by selling their
existing mortgages to Fannie Mae or Freddie Mac. This action made
more funds available to homeowners while adding consistency to interest
rates throughout the nation.
Each year, Fannie Mae and
Freddie Mac establish the maximum loan amount that qualifies for
a “conforming” loan as well as re-evaluating existing
credit and income requirements, down payment and suitable properties.
A twenty-five year history of annual conforming loan limits for
one, two, three and four unit properties is provided below.
| year |
single family |
two units |
three units |
four units |
2005
|
359,650 |
460,400 |
556,500 |
691,600 |
| 2004 |
333,700 |
427,150 |
516,300 |
641,650 |
| 2003 |
322,700 |
413,100 |
499,300 |
620,500 |
| 2002 |
300,700 |
384,900 |
465,200 |
578,150 |
| 2001 |
275,000 |
351,950 |
425,400 |
528,700 |
| 2000 |
252,700 |
323,400 |
390,900 |
485,800 |
| 1999 |
240,000 |
307,100 |
371,200 |
461,350 |
| 1998 |
227,150 |
290,650 |
351,300 |
436,600 |
| 1997 |
214,600 |
274,550 |
331,850 |
412,450 |
| 1996 |
207,000 |
264,750 |
320,050 |
397,800 |
| 1995 |
203,150 |
259,850 |
314,400 |
390,400 |
| 1994 |
203,150 |
259,850 |
314,100 |
390,400 |
| 1993 |
203,150 |
259,850 |
314,100 |
390,400 |
| 1992 |
202,300 |
258,800 |
312,800 |
388,800 |
| 1991 |
191,250 |
244,650 |
295,650 |
367,500 |
| 1990 |
187,450 |
239,750 |
289,750 |
360,150 |
| 1989 |
187,600 |
239,950 |
290,000 |
360,450 |
| 1988 |
168,700 |
215,800 |
260,800 |
324,150 |
| 1987 |
153,100 |
195,850 |
236,700 |
294,200 |
| 1986 |
133,250 |
170,450 |
205,950 |
256,000 |
| 1985 |
115,300 |
147,500 |
178,250 |
221,550 |
| 1984 |
114,000 |
145,850 |
176,250 |
219,100 |
| 1983 |
108,300 |
138,550 |
167,450 |
208,100 |
| 1982 |
107,000 |
136,800 |
165,100 |
205,300 |
| 1981 |
98,500 |
126,000 |
152,000 |
189,000 |
| 1980 |
93,751 |
119,925 |
144,671 |
179,887 |
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