A conforming loan is a type of mortgage that meets specific guidelines set by government-sponsored entities like Fannie Mae and Freddie Mac. These loans typically have limits on the amount borrowed, which can vary by location. Because they conform to these standards, they often come with lower interest rates compared to non-conforming loans. To qualify for a conforming loan, borrowers must meet certain criteria, including credit score, debt-to-income ratio, and down payment requirements. These loans are popular among homebuyers because they provide a reliable option for financing a home while adhering to established lending standards.