A conforming loan meets guidelines established by which entities?

• A. FHA and VA
• B. Ginnie Mae and Fannie Mae
• C. Fannie Mae and Freddie Mac
• D. Small Lenders and Credit Unions

Answer: (C)

Conforming loan guidelines are set by Fannie Mae and Freddie Mac, the two government-sponsored enterprises. These entities publish the underwriting criteria and loan limits that define what counts as a conforming loan. When a loan meets these standards—covering factors like loan amount, credit score, down payment, debt-to-income ratio, and documentation—the lender can sell it to Fannie Mae or Freddie Mac in the secondary market, providing liquidity and standardization for conventional mortgages.

FHA and VA govern separate government-backed programs with their own rules, so they’re not the bodies that define conforming standards. Ginnie Mae guarantees securities backed by loans insured or guaranteed by FHA, VA, or similar programs, but does not set the conforming criteria. Small lenders and credit unions don’t establish these guidelines themselves; they originate loans that may be deemed conforming only if they meet Fannie Mae/Freddie Mac standards.