Conventional Mortgage Guide

Conforming mortgages are the most common home loan option for buyers and homeowners. These loans offer competitive interest rates, flexible terms, and broad eligibility for primary residences, second homes, and investment properties.

A conforming mortgage is a home loan that meets the guidelines set by Fannie Mae and Freddie Mac, including loan size, credit standards, and documentation requirements. Because these loans can be sold on the secondary mortgage market, lenders are able to offer lower rates and more favorable terms.

Conforming Loan Limits

Conforming loan limits vary by county and are updated annually.

  • 1 unit Standard conforming limit (most counties): $832,750

  • 2 unit Standard conforming limit (most counties): $1,066,250

  • 3 unit Standard conforming limit (most counties): $1,288,800

  • 4 unit Standard conforming limit (most counties): $1,601,750

High-balance conforming limits apply in counties where home prices are higher.

Conforming Loan Highlights

  • Low down payment options (as little as 3% down for qualified buyers) with HomeReady, Home Possible and HomeOne

  • Competitive fixed and Adjustable rates

  • Available for primary, secondary and investment properties

  • Loan terms typically 15, 20, or 30 years but custom terms are available

  • Private Mortgage Insurance (PMI) required with less than 20% down

  • PMI drops off automatically when loan balance reaches 78% of value unlike FHA mortgage insurance which is for life of loan or 11 years

  • Gift funds and Gift of Equity are allowed for primary and second homes (not investment)

  • Wide range of refinance options, including rate-and-term and cash-out

  • Renovation loans for fixer-uppers and construction loans are available

  • Special guidelines to help parents buy homes for disabled adult child or elderly parents

  • Eligible buyers and homeowners may qualify for an automated appraisal waiver that can save time and appraisal costs. This option isn’t available on FHA, VA, or USDA loans.

Who Are Conforming Loans Best For?

Conforming mortgages are a great fit if you:

  • Have good credit history

  • Are buying or refinancing with a loan amount within the county loan limits

  • Prefer flexible loan structures

  • Plan to refinance or remove private mortgage insurance (PMI) in the future

Down Payment Options and Seller Contributions

Conforming loans offer flexibility when it comes to down payment sources:

  • Personal savings

  • Gifts from family

  • Employer assistance

  • Select down payment assistance programs (income limits may apply)

Sellers can also contribute towards closing costs (including temporary rate buy downs), prepaids and reserves, if negotiated in the real estate purchase and sales agreement.

Seller contribution limits vary based on down payment and occupancy type.

For primary residences and second homes:

  • 90.01% to 97% loan to value = up to 3% allowable credit

  • 75.01% to 90% loan to value = up to 6% allowable credit

  • 75% or less is up to 9% allowable seller credit.

Investment properties allow up to 2% seller contribution.

It’s important to note that if the seller credit is not completely used, it may be refunded back to the seller. Lenders may be able to use extra funds to buy down the rates – it’s important that your real estate agent works directly with your lender to make sure that the appropriate amount of credit is requested based on current rates.

Sellers cannot contribute towards the down payment.

Refinancing With a Conforming Mortgage

Homeowners can refinance into conforming loans to:

  • Lower their interest rate

  • Reduce monthly payments

  • Eliminate PMI

  • Access home equity (cash-out refinance)

  • Switch from an adjustable-rate to a fixed-rate mortgage

Frequently Asked Questions

Can I buy a home with less than 20% down?

Yes. Many buyers purchase homes with 3%–5% down using conforming loan programs. Private mortgage insurance (PMI) is typically required with less than 20% down, but PMI can often be removed later once you reach sufficient equity.

How do HomeReady® or Home Possible® programs work?

Primarily based on income limits and the property’s location. In higher-cost areas, the income limits are often higher than buyers expect.

These programs can be especially helpful for:

  • First-time buyers or people who have not bought a home within the last 3 years. Being a first-time homebuyer is NOT required to use this program.

  • Multi-generational households

  • Buyers with strong credit but limited savings

Can down payment assistance be used?

Yes, there are potentially local and statewide down payment assistance programs that may be used in Seattle and throughout King County. Availability depends on income, purchase price, and buyer eligibility.

Some programs offer deferred payments or forgivable terms, making homeownership more accessible.

Is a conforming loan better than FHA?

It depends on your goals and financial profile. Conforming loans often offer:

  • Lower long-term mortgage insurance costs

  • More flexibility with refinancing

  • Better options once you reach 20% equity

However, FHA loans can be helpful in certain scenarios. Comparing both options side-by-side is often the best approach in a competitive Seattle market.

Can a conforming loan skip the appraisal?

Sometimes. Fannie Mae’s Value Acceptance and Freddie Mac’s Automated Collateral Evaluation (ACE) let the automated underwriting system confirm a home’s value using existing data — no in-person appraisal required. It’s available on primary residences and second homes with loan-to-value up to 90%, generally on one-unit properties, at no cost to the borrower. Not every loan qualifies, and the decision comes from the automated system, not a request from the buyer. This option is unique to conforming loans — FHA, VA, and USDA purchase loans don’t offer it.

Why do conforming loan rates vary between borrowers?

Conforming loans use Loan Level Price Adjustments (LLPAs)— pricing adjustments set by Fannie Mae and Freddie Mac based on factors like your credit score, down payment or loan-to-value, occupancy (primary home, second home, or investment property), and property type. A condo, for example, may carry a different LLPA than a single-family home. This is why your rate may differ from a friend’s or neighbor’s even on a similar loan amount, and it’s part of why comparing offers apples-to-apples matters.

Condominium Financing

As of August 3, 2026, Fannie Mae retired its Limited Review pathway and Freddie Mac retired Streamlined Review — so nearly every condo purchase now goes through a Full Review, with closer scrutiny of the HOA’s budget, reserves, and insurance coverage.

A few other 2026 condo changes worth knowing:

  • The 50% investor-occupancy cap was removed for established condo projects (effective March 2026), opening up financing for buildings with higher rental ratios

  • Master insurance policies must now carry a per-unit deductible of $50,000 or less (effective July 1, 2026)

  • Master insurance policies no longer require inflation guard protection

  • HOA reserve requirements rise from 10% to 15% of budgeted assessment income starting January 4, 2027 — associations that don’t meet this may lose warrantable status

If a condo isn’t eligible for conforming financing, there are other programs available for non-warrantable condos.

Are manufactured homes eligible for conforming loans?

Yes, manufactured homes classified as real property can be financed with a conforming loan, though lenders apply stricter appraisal standards than for a site-built home. Freddie Mac recently updated its guidelines to allow financing on a manufactured home that’s been relocated once, provided it passes a structural inspection and isn’t sited in a more restrictive wind, roof load, or thermal zone than it was originally built for.

Last updated October 2026.