Conforming vs. Non-Conforming Loans

 

 

Buying your first home—or your first home in a long time—can feel like learning a new language. Terms like conforming and non-conforming loans might sound intimidating, but understanding them can save you money and stress.

 

 What Do “Conforming” and “Non-Conforming” Mean?

These terms come from Fannie Mae and Freddie Mac—two government-sponsored enterprises (GSEs) that keep mortgage money flowing. They don’t lend directly to buyers. Instead, they buy mortgages from lenders, bundle them into securities, and sell them to investors. This process helps keep interest rates lower and loans widely available.

 

To qualify for purchase by Fannie or Freddie, a loan must meet their guidelines—making it a conforming loan. If it doesn’t, it’s non-conforming.

 

Here’s the big one: loan size matters.

 

Baseline limit (most of Florida):

• $806,500 for a single-family home

High-cost areas (some Florida counties):

• Up to $1,209,750
• Multi-unit properties:2 units: $1,032,650
• 3 units: $1,248,150
• 4 units: $1,551,250

If your loan amount is above these limits, you’re looking at a jumbo loan, which is a type of non-conforming loan.

 

• Lower interest rates (because they’re less risky for lenders)
• Standardized guidelines (credit score, income, debt-to-income ratio)
• Easier to refinance later
• Minimum down payment: as low as 3% (with PMI if under 20%)

Non-conforming loans don’t meet Fannie/Freddie rules. Common reasons:

 

• Loan amount exceeds $806,500 (jumbo loan)
• Unique property (condos with certain restrictions, mixed-use homes)
• Borrower profile (self-employed, high debt ratio, credit challenges)

• Flexible underwriting
• Can finance luxury or unique homes
• Options for borrowers with non-traditional income

• Higher interest rates
• Larger down payments (often 10–20%)
• Stricter cash reserve requirements

Want to avoid jumbo rates and PMI? Consider an 80/10/10 piggyback loan:

 

• 80% first mortgage (conforming)
• 10% second mortgage
• 10% down payment

This strategy can:

 

• Eliminate PMI
• Keep your main loan conforming
• Save cash for closing costs

• Buying under $806,500? Conforming is usually best—lower rates, easier approval.
• Buying a luxury home or have unique circumstances? Non-conforming (jumbo) might be your ticket.
• Want to avoid PMI without 20% down? Piggyback could be a smart move.

 

Our market has a mix of price points. Many homes fall under the conforming limit, but waterfront or luxury properties often require jumbo financing. Knowing your options helps you shop with confidence.

 

• Key Takeaways
• Conforming = Lower rates, easier approval 
• Non-Conforming = Jumbo loans for high-priced homes 
• Piggyback = Smart way to avoid PMI

Let’s talk about your goals and budget. I’ll connect you with trusted local lenders who can walk you through conforming, jumbo, and piggyback options—so you can make the smartest move for your future.

 

Know your options before you shop! Call, text, message me.

#TampaRealEstate #FirstTimeHomeBuyer #MortgageTips

 

1. How Fannie Mae and Freddie Mac affect the US mortgage market.
2. Freddie Mac and Fannie Mae: Their Impact on the Mortgage Market
3. Loan Limits | Fannie Mae
4. Loan Limit Values for 2025 - Freddie Mac Single-Family
5. Conforming vs. Non-Conforming Loans Explained
6. Nonconforming Mortgages Explained: Types, Pros, and Cons
7. 80-10-10 Loan: Save Money with this Mortgage in 2025