A Conforming Loan is a mortgage that adheres to guidelines and limits set by the government-sponsored institutions Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac will purchase mortgages on the secondary market that are below the current conforming loan limit and that follow standards on income documentation and debt-to-income ratios. These loan limits are revised every year based on changes in average home prices.

Conforming loans typically offer a lower interest rate. Mortgages that are too large to be conforming loans are known as jumbo mortgages.