Another year, another increase in the conforming loan limit, thanks to continued home price gains.
The FHFA announced today that the new limit for loans backed by Fannie Mae and Freddie Mac would be a whopping $766,550 in 2024.
This figure is up $40,350 from the current loan limit of $726,200 for 2023.
The conforming loan limit is dictated by the annual change in home prices, which as you may have guessed, went up, again.
These loan limits are even larger in high-cost regions of the United States, special designated areas like Hawaii, and for multi-unit properties.
New Conforming Loan Limits for 2024
One-unit property: $766,550
Two-unit property: $981,500
Three-unit property: $1,186,350
Four-unit property: $1,474,400
As noted, the 2024 conforming loan limit has increased to $766,550 for one-unit properties.
This is the result of home prices rising 5.56% between the third quarters of 2022 and 2023.
Specifically, seasonally-adjusted nominal house prices from the expanded-data FHFA HPI are used to determine annual home price appreciation.
While it’s yet another increase, it’s nearly half the increase seen from 2022 to 2023, a sign of slowing home price appreciation.
Home prices still went up over the past year, but as mortgage rates more than doubled before surpassing 8%, the gains expectedly slowed.
But even if home prices decline in the future, this baseline loan limit will not decrease. Rather, it would remain flat, and would need to “make up” any losses before it could increase further.
This happened from the third quarter of 2007 until the third quarter of 2016, with the 2017 loan limit increase breaking nearly a decade of unchanged limits.
Tip: While VA loans no longer have loan limits if the borrower has full entitlement, these FHFA limits apply if they have remaining entitlement.
Avoid a Jumbo Loan by Staying At/Below These Limits
Beginning January 1st, 2024, you’ll be able to get a loan amount as large as $766,550 backed by Fannie Mae or Freddie Mac.
This is important as the pair allow down payments as low as 3% with a 620 FICO score, and have more flexible underwriting guidelines compared to jumbo loan lenders.
Meanwhile, a jumbo loan lender may require 20% down and a FICO score of at least 660.
Additionally, conforming mortgage rates tend to be cheaper than jumbo mortgage rates, though this trend reversed for the past few years before normalizing recently.
As you can see, the loan limits are even higher if it’s a duplex, triplex, or fourplex, with loan amounts as high as $1,474,400 accepted.
High Cost Loan Limits for 2024 Exceed $2 Million on Multi-Unit Properties
One-unit property: $1,149,825
Two-unit property: $1,472,250
Three-unit property: $1,779,525
Four-unit property: $2,211,600
But wait, there’s more! The loan limits are even higher in high-cost areas of the country.
These are defined as counties where 115 percent of the local median home value exceeds the baseline conforming loan limit.
The ceiling (maximum) for these high-cost limits is set at 150 percent of $766,550, or $1,149,825 for one-unit properties.
But they can also fall between the baseline and the ceiling depending on median home value.
This means a borrower in Los Angeles will be able to get a high-balance conforming loan for $1,149,825, while a home buyer in San Diego could get a slightly lower loan amount of $1,006,250.
Or in places like Denver, it’s just slightly above the baseline limit at $816,500.
This is why it’s important to know your county loan limit before you look for a home. Or if you’re a real estate agent, you can use these limits to set a strategic listing price.
Also note that loan limits are higher (set at the ceiling) in statutorily-designated areas including Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
So a prospective home buyer in Maui or Anchorage can get a $1,149,825 loan on a one-unit property and won’t have to worry about it being subject to jumbo loan underwriting.
The FHFA said the conforming loan limits will be higher in all but five U.S. counties or county equivalents.
There are over 3,000 counties or county-equivalent jurisdictions in the United States, with roughly 100 to 200 of them qualifying for high-cost limits.
You can see the full list of 2024 loan limits here.