Loan Types
4 min read
Conforming vs. Non-Conforming Loans: What Is the Difference?
Mike Starr
Founder, MortgageWizardTools · M.S. Organizational Management
Last reviewed: August 2026
Mortgages are classified as conforming or non-conforming based on whether they meet the guidelines set by Fannie Mae and Freddie Mac. This classification affects your rate, requirements, and options.
Conforming Loans
Conforming loans meet all Fannie Mae and Freddie Mac guidelines:
- •Loan amount at or below the conforming limit ($806,500 in 2025, up to $1,209,750 in high-cost areas)
- •Minimum 620 credit score
- •Maximum 45-50% DTI
- •Standard down payment requirements (3%+)
Because Fannie and Freddie buy these loans from lenders, conforming loans have the most competitive rates and the most flexible guidelines.
Non-Conforming Loans
Non-conforming loans do not meet Fannie/Freddie guidelines. The two most common types are:
- •Jumbo loans — exceed the conforming loan limit
- •Non-QM loans — do not meet qualified mortgage standards (alternative income, higher DTI, etc.)
Non-conforming loans are held by the lender (not sold to Fannie/Freddie), so the lender sets the requirements — which are typically stricter.
How It Affects You
| Conforming | Non-Conforming (Jumbo) | |
|---|---|---|
| Loan Limit | $806,500 (up to $1,209,750) | No limit |
| Min. Credit | 620 | 700-760+ |
| Min. Down | 3% | 10-20%+ |
| Reserves | 1-2 months | 6-12 months |
| Rate | Competitive | Competitive but varies |
Which Do You Need?
- •Under $806,500 (or the high-cost limit): conforming loan
- •Above the limit: jumbo (non-conforming)
- •Unique income situation (self-employed, investor): possibly non-QM
Key Takeaways
- •Conforming loans meet Fannie/Freddie limits and guidelines
- •Non-conforming loans exceed limits or do not meet guidelines
- •Conforming loans have more flexible requirements and competitive rates
- •Jumbo is the most common non-conforming loan
- •Determine your loan size to know which category you fall into