What Is a Fannie Mae or Freddie Mac Loan?

Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) are government-owned corporations that buy mortgages and create mortgage securities. These two entities help protect the mortgage securities industry.

Fannie Mae and Freddie Mac loans are obtained from lenders approved by these two entities. These loans are then purchased and guaranteed by Fannie Mae or Freddie Mac. Fannie Mae and Freddie Mac loans must be conforming loans. As such, there is a limit on the size of loans backed by Fannie Mae or Freddie Mac.