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What is the difference between a conforming and a non-conforming (a.k.a. jumbo) loan?

April 26, 2017a.k.a conforming difference Jumbo loan Non-Conforming

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What is the difference between a conforming and a non-conforming (a.k.a. jumbo) loan?

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A conforming loan is one that does not exceed the maximum loan limit of the two primary GSE’s (Government Sponsored Enterprises), Fannie Mae and Freddie Mac. The current conforming maximums are: $275,000 for a 1 unit property, $351,950 for a 2 unit property, $425,400 for a 3 unit property and $528,700 for a 4 unit property. These maximums apply to all states except Alaska and Hawaii. Therefore a jumbo loan is one that has a loan amount exceeding the aforementioned limits. The interest rates on jumbo loans are typically between 1/4-5/8% higher than on conforming loans.