Conforming loan limits expected to rise in 2024
All signs point to the Federal Housing Finance Agency (FHFA) increasing the conforming loan limit from $726,200 in 2023 to $750,000 in 2024. The conforming loan limit refers to the annually adjusted dollar cap on the size of a mortgage that Fannie Mae and Freddie Mac will purchase or guarantee.
The FHFA sets these limits, which apply to all conventional loans delivered to Fannie Mae and Freddie Mac. High-cost areas like San Francisco and New York City may have higher conforming limits based on significant home appreciation in recent years. You should check with your loan officer, who will have access to conforming loan limits by county.
A conforming loan amount cannot exceed the conforming loan limit for the home’s location. The maximum loan size is set by regulators from the FHFA and updated every year.
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted to reflect the change in the average US home price. The adjustment is based on the FHFA House Price Index report, and the percentage increase is based on the housing price increase.
The official announcement is expected in late November 2023, and most lenders are setting the conforming loan limit to $750,000 for a one-unit property. For higher-priced areas, the conforming loan limit for a single-family home will be set at $1,125,000. The new conforming loan limits take effect a month later, on January 1st.
Why do we care about conforming loan limits?
Increasing the conforming loan limits gives homebuyers more buying power in a competitive market when home values are high.
You may have to get a jumbo loan if you need a home loan larger than your county’s conforming loan limit. Jumbo loans allow for higher loan amounts but are traditionally harder to qualify for, requiring higher credit scores and larger down payments. Staying within the conforming loan limit allows homebuyers to qualify for more competitively priced loans with less stringent eligibility requirements.
For more information on conforming loan limits and how much you may be able to be qualified for, contact a member of our loan team to learn more.