Conventional loans, or conforming loans are secured by government sponsored entities such as Fannie Mae and Freddie Mac. Loans which are larger than the limits set by Fannie Mae and Freddie Mac are called Jumbo Loans and are not funded by these government sponsored entities. As a result, they usually carry a higher interest rate and some additional underwriting requirements. Currently, Fannie Mae and Freddie Mac's conforming limit on a first loan for a single family home is $417,000. This limit is reviewed annually and, if needed, changed to reflect changes in the national average price for single family homes. The current loan limit applies to all conventional mortgages delivered after January 1, 2006.

One way to avoid a Jumbo Loan and lower your overall interest payments if your purchase or refinance balance is above $417,000 is to use a combination of both first and second loan, referred to as an 80/10/10, 80/15/5 or 80/20.