What Is a Conforming Loan? Limits, Requirements, and Benefits for 2025

A conforming loan is a mortgage that adheres to the funding criteria set by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac, including maximum loan amounts and borrower qualifications. For most home buyers, securing a conforming loan means access to lower interest rates, a more straightforward application process, and greater appeal to sellers. The single most important factor is the loan limit, which for 2025 is $806,500 for a single-family home in most of the U.S., with higher limits in designated high-cost areas.

What Are the Defining Features of a Conforming Loan?

A conforming loan must meet two primary sets of criteria established by Fannie Mae and Freddie Mac. First, the loan amount cannot exceed the conforming loan limit for the specific county where the property is located. Second, the borrower must meet specific underwriting standards for creditworthiness.

Key borrower requirements typically include a minimum credit score of 620, a down payment of at least 3%, and a debt-to-income (DTI) ratio—a percentage of your gross monthly income used to pay debts—that is generally below 45%. Because these loans are deemed lower risk, they are more easily sold on the secondary mortgage market, which translates to better rates and terms for qualified borrowers.

How Do Conforming Loan Limits Work for 2025?

The conforming loan limit is adjusted annually by the Federal Housing Finance Agency (FHFA) based on home price trends. For 2025, the baseline limit for a one-unit property is $806,500. However, in areas where the median home value is 115% above the baseline, the limit is increased. In these high-cost counties, the limit for a single-family home can be as high as $1,209,750.

Limits are also higher for multi-unit properties, as shown in the table below.

To find your county's exact limit, you can use the interactive loan limit map on the FHFA website.

What Are the Advantages of Choosing a Conforming Loan?

For eligible home buyers, conforming loans offer several distinct benefits.

• Competitive Interest Rates: Lenders often offer lower rates on conforming loans because the standardization makes them less risky and easier to sell.
• Easier Qualification Process: While credit standards are firm, the process is typically more streamlined than for non-conforming jumbo loans, which may require more extensive financial documentation.
• Appeal to Sellers: In a competitive market, an offer backed by a conforming loan can be more attractive to a seller than one with a jumbo or government loan, as it suggests a lower risk of the deal falling through due to financing issues.
• Property Flexibility: Conforming loans can be used for a primary residence, a second home, or an investment property, offering more options than some government-backed loans.

When Might a Non-Conforming Loan Be a Better Option?

A conforming loan isn't the right fit for every situation. You may need to consider a non-conforming loan if:

• You Need a Larger Loan: If the purchase price of your desired home requires a mortgage that exceeds your county's conforming loan limit, a jumbo loan is necessary.
• Your Credit Score Is Lower: If your credit score is below 620, a government-backed loan like an FHA loan (which can accept scores as low as 580 with a 3.5% down payment) may be a viable alternative.
• You Have a Small Down Payment: While conforming loans allow for 3% down, programs like the VA loan (for eligible veterans and service members) and USDA loan (for eligible rural homebuyers) offer zero-down-payment options.

Based on our experience assessment, discussing your financial picture and homebuying goals with a lender is the best way to determine if a conforming loan is your most advantageous path forward.