What type of loans meet the underwriting standards of Fannie Mae or Freddie Mac?

Conforming loans are those that meet the underwriting standards set by Fannie Mae and Freddie Mac, which are government-sponsored enterprises that buy and guarantee mortgages. These standards typically include limits on the loan amount, borrower credit scores, down payment requirements, and debt-to-income ratios. By conforming to these guidelines, loans qualify for purchase by these entities, which helps facilitate liquidity in the mortgage market.

Jumbo loans do not meet Fannie Mae or Freddie Mac standards because they exceed the maximum loan limits set by these institutions, making them nonconforming. Subprime loans are designed for borrowers with lower credit scores and typically have higher interest rates and more lenient underwriting criteria that do not align with the standards of Fannie Mae or Freddie Mac. Adjustable-rate mortgages can be conforming or nonconforming depending on specific features, but simply being adjustable does not inherently qualify a loan to be conforming. Thus, conforming loans are the correct answer, as they directly align with the specific underwriting standards established by Fannie Mae and Freddie Mac.