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What is a Jumbo Loan and What is a Conforming Loan?
A jumbo loan, which is also known as a non-conforming loan, is a mortgage that exceeds the maximum loan limits set by the Government Sponsored Entities [GSE's] such as Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Fannie Mae and Freddie Mac, respectively. [A conforming loan is any loan that is eligible for resale to GSE's. It is more than just a loan size limitation. Ultimately it's up to the GSE as to what loans they will accept. For example, conforming usually requires home owners to fully document their income].

Conforming loans, on the other hand, simply are loans that are within the limits. These limits can vary State by State [it's not County by County, this is referring to FHA. FHA only provides insurance for loans that meet their criteria, and these criteria are different than conforming criteria, most notably, the loan size limitations are segregated by county and are usually lower than the conforming limits].

According to the FannieMae website, these are the current loan size limitations

Single-Family Mortgage Loan Limits effective January 1, 2008:

First mortgages

  • One-family loans: $417,000
  • Two-family loans: $533,850
  • Three-family loans: $645,300
  • Four-family loans: $801,950
Note: One- to four- family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country.

Second mortgages

  • $208,500
  • In Alaska, Hawaii, Guam, and the U.S. Virgin Islands: $312,750
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