Conforming loans are underwritten according to the guidelines of which two agencies?

Conforming loans are underwritten according to the guidelines of which two agencies?

• A. Fannie Mae and Freddie Mac
• B. FHA and VA
• C. Freddie Mac and Ginnie Mae
• D. Ginnie Mae and HUD

Answer: (A)

Conforming loans are conventional loans that must meet the underwriting standards set by Fannie Mae and Freddie Mac. These two government-sponsored enterprises buy and guarantee a large share of mortgages, so lenders align their approvals with the published guidelines to ensure loans can be sold to them in the secondary market. The criteria cover loan size within conforming limits, borrower credit scores, income verification, debt-to-income ratios, and property requirements. Because they conform to these standards, they can be eligible for purchase by Fannie Mae or Freddie Mac, which helps keep rates competitive and liquidity high. Loans that don’t fit these guidelines—such as jumbo loans or government-backed insured programs (FHA/VA)—use different underwriting criteria.

Conforming loans are conventional loans that must meet the underwriting standards set by Fannie Mae and Freddie Mac. These two government-sponsored enterprises buy and guarantee a large share of mortgages, so lenders align their approvals with the published guidelines to ensure loans can be sold to them in the secondary market. The criteria cover loan size within conforming limits, borrower credit scores, income verification, debt-to-income ratios, and property requirements. Because they conform to these standards, they can be eligible for purchase by Fannie Mae or Freddie Mac, which helps keep rates competitive and liquidity high. Loans that don’t fit these guidelines—such as jumbo loans or government-backed insured programs (FHA/VA)—use different underwriting criteria.