Are Fannie Mae Loans Conventional? | Conforming Loan Clarity

Yes, a mortgage bought by a housing GSE counts as conventional when it isn’t FHA-, VA-, or USDA-backed.

You’ll hear “Fannie Mae loan” tossed around like it’s a product you can pick off a menu. It’s not. Fannie Mae doesn’t lend you money directly. A bank, credit union, or mortgage lender does. Then, after closing, that lender may sell the loan to Fannie Mae.

So when people ask if these loans are conventional, they’re asking where the loan fits in the mortgage family tree. Good news: the answer is straightforward once you know two labels—conventional and conforming.

Are Fannie Mae Loans Conventional? And What That Means For You

A conventional mortgage is a home loan that is not insured or guaranteed by the federal government. That’s the cleanest definition, and it’s the one the Consumer Financial Protection Bureau uses when it explains conventional loans. CFPB’s “What is a conventional loan?” spells it out in plain terms.

Fannie Mae is a government-sponsored enterprise (a GSE). When your mortgage is eligible to be purchased by a GSE and it isn’t tied to a government insurance program, it sits in the conventional bucket. This is why people commonly pair “Fannie Mae” with “conventional,” even though the lender is the one that originated the loan.

What you get from this label is practical: conventional rules shape down payment options, mortgage insurance rules, underwriting documentation, and pricing. Lenders also like the liquidity of selling loans that fit GSE standards, which can affect what they’re willing to offer.

Conventional Vs. Conforming: Two Labels That Get Mixed Up

“Conventional” answers one question: is the loan backed by a federal insurance or guarantee program? If not, it’s conventional.

“Conforming” answers a different question: does the loan meet the size and eligibility standards that let it be purchased by Fannie Mae or Freddie Mac? A loan can be conventional and conforming, or conventional and non-conforming.

One simple way to think about it: conforming is a rulebook for sale to the GSEs. Conventional is the umbrella category that excludes FHA, VA, and USDA programs.

Where “jumbo” fits

A jumbo loan is usually a conventional loan that’s too large to meet the conforming loan limit. It can still be conventional, but it can’t be sold to Fannie Mae or Freddie Mac under the standard limit rules.

Government-backed loans are different

FHA, VA, and USDA loans are tied to government insurance or guarantees. Those are not conventional loans under the standard definition used by regulators and lenders.

How Fannie Mae Fits Into The Picture

Fannie Mae buys mortgages from lenders, then packages many of them into mortgage-backed securities. That buying role is why lenders care about Fannie Mae eligibility. If a loan meets the Selling Guide, it’s easier for a lender to sell it into the secondary market.

If you want the source that lenders treat as the rulebook, it’s the Fannie Mae Selling Guide. It lays out how lenders originate and underwrite loans intended for sale to Fannie Mae.

On the consumer side, Fannie Mae also explains the basic mortgage categories in its homebuyer education content, including the way conventional loans are commonly discussed in relation to conforming guidelines. See Fannie Mae’s overview of mortgage loan types.

What Makes A Loan “Conforming” Under Fannie Mae Rules

Conforming status usually comes down to two things: loan size and eligibility details. Loan size is the piece people quote most, since it has a published ceiling. Eligibility covers borrower qualifications, property types, documentation, and risk layering limits that lenders apply to stay within GSE purchase rules.

Conforming loan limits change by year

The Federal Housing Finance Agency (FHFA) sets the conforming loan limit values for mortgages the Enterprises can acquire. For 2026, FHFA announced the baseline one-unit limit for most of the U.S. is $832,750, with higher limits in designated high-cost areas. That announcement is public here: FHFA conforming loan limits for 2026.

This matters when you’re house hunting near the line. If your loan amount lands above the limit for your county and property type, you’re likely in jumbo territory, which can change underwriting, rates, and reserve rules.

Conforming also means meeting underwriting standards

Even if your loan amount sits under the limit, it still has to fit the eligibility rule set. Lenders typically verify income, assets, employment, debts, and property details to meet GSE purchase requirements. The lender’s automated underwriting system (or a manual underwrite path) checks the full risk profile.

That’s why two borrowers with the same loan amount can land in different outcomes. Size alone doesn’t decide it.

Common Traits Of A Fannie Mae-Eligible Conventional Loan

Most Fannie Mae-eligible loans share a familiar shape. Still, the final call sits with your lender’s underwriting and the specific program terms offered at the time you apply.

Down payment and loan-to-value

Many conventional conforming programs allow low down payments for qualified borrowers, including some options that start at 3% down. The tradeoff is that the lender will closely evaluate the file, and mortgage insurance may be required above certain loan-to-value levels.

Mortgage insurance on conventional loans

Private mortgage insurance (PMI) is common when the down payment is under 20%. Unlike FHA mortgage insurance, PMI can often be removed once you reach certain equity thresholds under the rules that apply to your loan and servicer.

Credit, income, and documentation

Expect a full review of credit history, income stability, and debts. Lenders can layer their own overlays on top of GSE standards, so one lender may say “yes” while another says “not yet.” Shopping lenders can be worth it when your file sits near the edge of approval.

Also, conventional underwriting is paperwork-heavy. Plan on providing pay stubs, W-2s or tax returns, bank statements, and explanations for large deposits or credit events.

Fannie Mae Conventional Loan Rules And Eligibility Basics

If you want a practical checklist, focus on the levers that most often change the outcome: loan amount versus county limits, loan-to-value, debt-to-income, credit history, and the property’s eligibility. These factors shape whether the loan can be sold to Fannie Mae and whether the lender is willing to approve it at a given rate and fee structure.

One more nuance: “eligible for Fannie Mae” and “best fit for you” aren’t always the same thing. Some borrowers do better with FHA due to credit profile or cash-on-hand. Others do better with conventional due to mortgage insurance behavior and long-term cost.

Think of it like choosing shoes. Two pairs might fit, but one feels better after a long day.

Item	What It Usually Means For A Conforming Conventional Loan	Where To Verify
Loan type label	Not FHA, VA, or USDA-backed	CFPB definition page
Loan size	At or under the county limit for the property type	FHFA 2026 limits release
Underwriting standard	Meets GSE eligibility rules used for purchase	Fannie Mae Selling Guide
Down payment range	Can be low for qualified borrowers; terms depend on program and risk	Loan estimate and lender program details
Mortgage insurance	PMI may apply with under-20% down; removal rules can apply later	Closing disclosure and servicer policy
Property eligibility	Home type and occupancy must fit program rules	Appraisal report and lender underwriting
Pricing and overlays	Lenders may add stricter rules than the base GSE standard	Ask each lender for their overlays in writing
After-close handling	Lender may sell the loan; servicing may transfer	Servicing transfer notices and your mortgage statements

How To Tell If Your Loan Is Likely Fannie Mae-Eligible

You don’t need secret lender access to get a strong read. You can narrow it down with a few practical checks before you even apply.

Check the program type on your paperwork

When you get a Loan Estimate, look for clues in the loan description. FHA and VA loans are usually labeled clearly, and they come with program-specific upfront and monthly insurance or funding fee structures. Conventional loans will be shown as conventional, with PMI noted when it applies.

Check the loan amount against your county’s conforming limit

The FHFA release gives the baseline and explains that high-cost areas use higher values. Your lender can also tell you the exact limit for your county and property type. If your needed loan amount sits above that local limit, you’re likely looking at jumbo financing instead of a conforming loan that can be sold to the GSEs.

Ask which AUS result they’re using

Lenders commonly run an automated underwriting decision early. Ask which system the lender is using and whether the file is being shaped for sale to Fannie Mae. A good loan officer won’t dodge this. If they can’t explain the path, keep shopping.

Watch for “non-conforming” flags

Some loans are conventional but still not eligible for purchase by the GSEs due to features like interest-only payments, unusual collateral issues, or documentation types that don’t meet the program’s standards. These can still be valid loans, but they’re outside the conforming box.

When A Conventional Loan Isn’t Conforming

Non-conforming doesn’t mean “bad.” It means “outside the GSE purchase standards.” The most common reason is size: jumbo loans. Other reasons can include property type limits, documentation constraints, or loan features the lender offers that don’t fit the sale rules.

In practice, non-conforming loans can carry different reserve expectations, different rate pricing, and tighter underwriting. Some borrowers still pick them since they want a higher-priced home or a loan structure that fits a specific situation.

Smart Questions To Ask A Lender Before You Apply

These questions keep you from wasting time and getting whiplash from vague answers.

• Is this loan conventional, or is it tied to FHA, VA, or USDA?
• Is the loan intended to be conforming and eligible for sale to Fannie Mae or Freddie Mac?
• What county conforming limit are you using for my property type?
• What down payment options fit my profile, and how does mortgage insurance work on each?
• Do you apply overlays beyond the base conforming standard?
• Will you service the loan after closing, or can servicing transfer?

Ask for answers in writing when you can. It cuts down on misunderstandings when numbers change during underwriting.

Situation	What To Check	Likely Category
You see FHA or VA on the Loan Estimate	Program label and insurance/funding fee line items	Government-backed, not conventional
Your loan amount is under the county limit	Match loan amount to FHFA limits for your area	Conforming is possible
Your loan amount is above the county limit	County limit by property type and number of units	Jumbo (conventional, non-conforming)
You’re putting less than 20% down	PMI terms, cost, and removal rules	Conventional with PMI is common
Income is complex (self-employed, variable pay)	Documentation needs and lender overlays	Conforming may still work with strong docs
Property is unusual (unique zoning, mixed use)	Appraisal acceptability and property eligibility	May push toward non-conforming
You want the lowest cash at closing	Compare conventional low-down options to FHA costs	Either can fit; compare totals
You plan to refinance later	Refi rules, equity path, and MI behavior	Conventional can be a strong fit

A Clear Way To Explain This In One Line

If you want a clean sentence you can use with a lender or a friend, use this: a “Fannie Mae loan” is usually a conventional conforming mortgage that meets the standards for purchase by Fannie Mae after a lender originates it.

That sentence keeps the labels in the right place. It also avoids the common myth that Fannie Mae is your lender. Nope—your lender is your lender. Fannie Mae is the buyer in the background if the loan fits the box.

What To Do Next If You’re Shopping For A Mortgage

Start by deciding what you want to optimize: monthly payment, total cost over a few years, or the least cash at closing. Then compare two or three lenders with the same scenario: purchase price, down payment, credit profile, and property type.

Ask each lender to quote one conventional conforming option and, if you might qualify, a government-backed option for comparison. Put the Loan Estimates side by side and look at interest rate, mortgage insurance, and total monthly payment. The numbers will tell the story fast.

If your loan amount is near the conforming limit, double-check the county limit you’re using and your property’s unit count. That single detail can swing the entire loan category.