How is the Conforming Loan Limit Determination established?

• A. Established county-by-county based on local area housing costs
• B. Fixed national limit
• C. Based on borrower income
• D. Based on loan-to-value ratio

Answer: (A)

Conforming loan limits are set by the FHFA for each county, reflecting local housing costs. This means the maximum loan size that Fannie Mae and Freddie Mac will purchase varies by county, with higher ceilings in high-cost areas and lower baselines in others. Borrower income or the loan-to-value ratio don’t determine the limit; those factors affect qualification and pricing, not the threshold itself.