Conforming loan
A mortgage that meets the purchase standards set by Fannie Mae and Freddie Mac, including loan-size limits. Meeting those standards lets the lender sell the loan into the secondary market.
Key Takeaways
- Fannie Mae and Freddie Mac buy loans that meet their underwriting standards from primary market lenders, and a loan meeting those standards is conforming.
- The loan amount also has to fall at or under the annual conforming loan limit the Federal Housing Finance Agency sets for the county where the property sits.
- For 2026 the one-unit limit is $832,750 in most of the country, with a high-cost ceiling of $1,249,125.
- King, Pierce, and Snohomish counties carry a 2026 one-unit limit of $1,063,750, while Clark and Spokane counties sit at the $832,750 baseline.
What It Means
A conforming loan is a mortgage written to the purchase standards of Fannie Mae and Freddie Mac, the two government-sponsored enterprises that buy closed loans from the lenders who originate them. Both exist to add liquidity to the mortgage market, and both do it the same way: they buy loans that meet their underwriting standards from primary market participants, then package many of those loans into securities sold to investors.
Two tests have to pass. The borrower and the property must clear the credit, capacity, and collateral standards the enterprises publish, and the loan amount must fall at or under the conforming loan limit set each year for that county. Miss either one and the loan is nonconforming. Subprime lending sits on the other side of that line, serving borrowers who fall outside the normal conforming standards. Lenders care because a conforming loan can be sold into the Secondary Mortgage Market and the cash recycled into the next borrower, while a nonconforming loan has to find a private buyer or stay on the books. It is worth filing this next to the other loan types a broker meets on the job.
How It Works in Washington
Washington does not write conforming standards. Those come from Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency, which publishes a county-by-county limit every year. What Washington regulates is the people who assemble the loan and the instrument that secures it. Under RCW 19.146.200, a person, unless specifically exempted under RCW 19.146.020, may not engage in the business of a mortgage broker or loan originator without first obtaining and maintaining a license under the Mortgage Broker Practices Act. Once the loan closes it is nearly always secured by a Deed Of Trust rather than a mortgage, because RCW 61.24.020 provides that a deed conveying real property to a trustee in trust to secure the performance of an obligation may be foreclosed by trustee's sale.
County limits matter more here than in most states, which is worth remembering when you talk financing with a client. For 2026 the Federal Housing Finance Agency set the one-unit limit at $832,750 in most of the United States, and the ceiling in the highest-cost areas at $1,249,125, which is 150 percent of the baseline. The agency's own 2026 county file puts King, Pierce, and Snohomish counties at $1,063,750 for a one-unit property, while Clark and Spokane counties stay at the $832,750 baseline. The same loan amount can conform in Tacoma and be a jumbo in Spokane.
Example
Priya buys a townhouse in Bellevue, in King County, for $1,150,000 and puts 20 percent down, which is $230,000. Her loan is $920,000. King County's 2026 one-unit conforming limit is $1,063,750, so $920,000 clears the line and the loan conforms. Her lender closes it, sells it to Fannie Mae, and puts the proceeds to work on the next borrower.
Her coworker Dev buys at the same price in Spokane County with the same 20 percent down and the same $920,000 loan. Spokane County's 2026 one-unit limit is the $832,750 baseline, so Dev is $87,250 over the line. His loan is nonconforming. It can still be a Conventional Loan, since no government agency is insuring or guaranteeing it, but Fannie Mae and Freddie Mac will not buy it, so Dev's lender has to price and place it another way.
Common Mistakes and Exam Traps
- Conforming asks whether Fannie Mae or Freddie Mac would buy the loan. Conventional asks whether a government agency insures or guarantees it. A loan can be conventional and still fail to conform.
- The conforming loan limit is not one national number. It is set county by county, and Washington has counties above the baseline and counties sitting on it.
- Fannie Mae and Freddie Mac operate in the secondary market. They do not lend to consumers, so any answer describing a buyer getting a loan from Fannie Mae is wrong.
- Subprime and nonconforming overlap but are not the same idea. Subprime describes a borrower who cannot satisfy the underwriting standards, while a jumbo borrower may have excellent credit and simply need too much money.
Where you'll learn this
Frequently Asked Questions
What is the difference between a conforming loan and a conventional loan?
Conventional means no government agency insures or guarantees the loan. Conforming means Fannie Mae or Freddie Mac would buy it. Most conforming loans are conventional, but a conventional loan that is too large or that misses an underwriting standard is nonconforming.
Does the limit apply to the purchase price or to the loan amount?
To the loan amount. A buyer can pay well above the limit and still have a conforming loan if the down payment brings the borrowed amount under the county figure.
Why does the limit change from one Washington county to the next?
The Federal Housing Finance Agency raises the limit where 115 percent of the local median home value exceeds the national baseline, capped at 150 percent of that baseline. For 2026 that puts King, Pierce, and Snohomish counties at $1,063,750 while most of Washington sits at $832,750.