What is a conforming fixed rate mortgage (FRM) home loan?


Conforming fixed rate mortgage (FRM) home loans are loans with fixed monthly payment for the term of the mortgage; conforming FRMs are underwritten under guidelines as set by Freddie Mac (FHLMC) and Fannie Mae (FNMA) (two semi-government entities) and up to the specified loan amount limits. Conventional mortgages can be any except funded by FHA, VA, RHS or other government institution.

FHA is the Federal Housing Administration; VA stands for the Department of Veteran Affairs, and RHS is the Rural Housing Service - yet another federal agency.

Mortgage Loan Types Explained

Home loans are in the most general sense fixed or adjustable rate mortgages - FRMs and ARMs. Fixed rate mortgages have the same monthly payment throughout the life of the loan. For adjustable rate mortgage (ARM) loans the monthly payment will fluctuate and is very likely to go up during some time of the mortgage.

FRM and ARM loans are the most basic mortgage types at all; however, on the current market there will be many other complex mortgage products, based at large on fixed and adjustable rate mortgages but with a slightly different design. It is recommended before you apply for a mortgage, especially if you are a first-time homeowner, you use professional advice from a real estate agent, or personal finance advisor, and attend home counseling.

Conventional Conforming Home Loans Explained

All non-government backed home loans are conventional ones. Further, they split into conforming and non-conforming loans.

Conventional conforming loans have strict underwriting requirements and loan amount limits as set forth by Freddie Mac and Fannie Mae. Conventional non-conforming loans can be:

  • Jumbo and super-jumbo home loans when the current conforming loan amount limit is exceeded;
  • B, C and D paper loans when borrower credit score and history do not meet conforming credit criteria.

Current Conventional Conforming Mortgage Loan Limits for 2008

One-family: $417,000 (temporarily increased to $729,750)

Two-family: $533,850

Three-family: $645,300

Four-family: $801,950

Different rules and limits apply to multi unit properties. Mortgage loan limits for properties in Guam, Hawaii, Alaska, and the Virgin Islands are 50% higher.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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