Conforming Loan Limits: Everything You Need to Know

In 2024, the conforming loan limit for a one-unit property in most US counties is $766,550. This marks a 5.6% increase from 2023. The Federal Housing Finance Agency adjusts these limits every year.

Conforming loan limits outline the maximum mortgage amount that Fannie Mae and Freddie Mac can purchase from lenders. They depend on the average home prices of a location.

Conforming loans have relatively low interest rates and down payments. Who wouldn’t want to save money on their mortgage? Find out the loan limits in your area and get pre-approved now!

What Are Conforming Loan Limits?

Conforming home loan limits define the maximum mortgage amount that government-sponsored enterprises like Fannie Mae and Freddie Mac will insure. Loans that adhere to these limits are called conforming loans.

Conforming loans have lower interest rates and less strict qualification requirements than non-conforming loans. The limits ensure that home buyers have affordable financing options.

The FHFA annually updates the conforming mortgage limit to reflect changes in home prices. Property values and market conditions influence this variation.

Conforming Loan Limits in 2024 

With rising average home prices, conforming loan limits have also increased since last year. In 2024, the limit is $766,550 for a one-unit property in most US counties.

Here are the baseline loan amounts across home types for 2024:

• Single-unit homes: $766,550
• Two-unit homes: $981,500
• Three-unit homes: $1,186,350
• Four-unit homes: $1,474,400

An increased mortgage limit gives home buyers more purchasing power. It also ensures liquidity in the mortgage market.

How Do Conforming Loan Limits Work?

In November each year, the FHFA adjusts the baseline loan limit based on the House Price Index report. This reflects any change in average home values during the previous year.

Most counties in the US operate on the baseline loan limit for conforming loans. However, select counties have a higher loan limit. These high-cost limits account for the increased cost of housing in those regions.

Lenders typically prefer conforming loans as they are backed by GSEs like Fannie Mae and Freddie Mac. They are also easy to sell in the secondary mortgage market.

For a loan above the limit, consider a jumbo loan. However, these come with high interest rates and stringent qualification requirements. You can increase your down payment to stay within the limit and enjoy the benefits of conforming loans.

High-Cost Limits in 2024 

The high-cost loan limit for this year is $1,149,825, with an increase of $60,525 from last year. This is 150% of the baseline limit of $766,550.

High-cost areas include Alaska, Hawaii, Guam, and the US Virgin Islands. You should know if your location qualifies as a high-cost area, since it affects your maximum mortgage amount.

Advantages of Conforming Loan Limits

Conforming loan limits bring the following advantages:

• Low Interest Rates and Down Payments: You can save big on interest rates and down payments (which can be as low as 3%) with conforming loans.
• Easier Approval Process: Since conforming loans adhere to GSE guidelines, lenders have clear criteria to follow. This makes it easier for borrowers to qualify.
• Greater Availability: Lenders typically prefer conforming loans. They are more widely available than other types of loans.

Disadvantages of Conforming Loan Limits

On the other hand, here are the negatives of conforming loan limits:

• Loan Amount Restrictions: You cannot borrow more than the conforming loan limit. If you need to do so, you can opt for a jumbo loan.
• Rigid Qualification Criteria: These include credit score, debt-to-income ratio, and income verification. It can be hard for some borrowers to qualify.
• Less Flexibility: Since conforming loans follow standardized guidelines, they have less flexible terms. Your specific borrowing needs may not be met.

How to Qualify for Conforming Loans? 

To qualify for a conforming loan amount, keep the following things in mind:

1. Credit Score: Lenders typically require a minimum credit score of 620, but higher scores often result in better interest rates.
2. Debt-To-Income Ratio: Lenders prefer a DTI ratio of 36% for optimal qualification. However, if your credit profile is good, you may qualify for slightly higher ratios. 
3. Down Payment: Lenders require a minimum of 3% down payment. Larger down payments can reduce monthly mortgage payments.
4. Property Appraisal: An appraiser helps assess the value of your property to make sure it matches the loan amount you’re seeking.
5. Mortgage Insurance: Lenders require private mortgage insurance if your down payment is below 20%. This protects lenders against potential default.

Bottom Line

Conforming loan limits offer several advantages to home buyers, such as standardized guidelines and low interest rates. Since conforming loans are backed by GSEs, the lending process is simple and secure.

As America’s leading real estate platform, Houzeo can help you find the best lenders and increase your chances of a quick pre-approval.

Frequently Asked Questions

• Conforming Loans