Loans that meet certain borrowing guidelines and are sold to the secondary market

Conforming loans have a set of standards for the amount you can borrow and how much you need to put towards a down payment. For example, the ceiling on a conforming loan for a single-family house is $240,000 in the continental U.S. The cap in Alaska and Hawaii is $360,000. If you meet these guidelines, you can get lower interest rates and better financing options. If you want to borrow more you can apply for a non-conforming or jumbo loan.

Lenders make sure that the loans "conform" to these standards so that they can later package groups of conforming loans to sell to institutions in the secondary market, like the Federal National Mortgage Association (Fannie Mae) to make money available for new loans.

See: Secondary market
Compare: Jumbo loan