The national average mortgage loan limit in 2023 is $726,200 for a single-unit property. For Alaska and Hawaii, the limit is $1,089,300. The homebuyer’s purchasing power increases with larger loan limits.
The mortgage loan limit is the maximum amount that a borrower can get for a home loan. The Federal Housing Finance Agency (FHFA) sets these limits. Moreover, loans above these limits are called jumbo loans.
📈 RISE IN MORTGAGE LOAN LIMITS IN 2023
- The baseline mortgage loan limit saw an increase to $726,200 from the 2022 limit of $647,200.
- House prices increased by 12.21 percent, on average, in the 3rd quarter of 2023.
- The baseline reflects the average change in the U.S. home price.
Impact of Loan Limit Changes
The 2023 mortgage limits impacted three types of loans.
1. Conventional Loans
The Federal Housing Finance Agency (FHFA) raised the baseline conforming loan limits for conventional loans in 2023. It saw an increase from $79,000 to $726,200 for single-unit properties. High-cost areas have higher loan limits, set on a county-by-county basis.
Standard mortgage financial programs apply to single-family properties with up to 4 units. The number of units in the property determines the increase in loan limits.
2. VA Loans
VA loans typically don’t have loan limits since the VA insures a fixed percentage of the mortgage for lenders in the event of default. However, limits apply in certain situations, such as entitlement or when lenders consider the loan at slightly higher risk.
Impacted entitlement can occur if you fail to pay back a previous VA loan or have an unpaid foreclosure. Lenders may have different qualification requirements for jumbo VA loans they consider as a higher risk.
3. FHA Loans
At the start of each year, the Federal Housing Administration (FHA) limits residential properties to up to 4 units.
The FHA loan limits are set at the county level. The lowest limit remains at 65% for the national conforming loan. That is $472,030 for a single-unit property in 2023.
However, loan limits are often higher in many areas.
How Much Mortgage Can I Afford?🏡
Select Your Loan Type
-
New Home Purchase
-
Mortgage Refinance
-
Cash-out Refinance
How Do Mortgage Loan Limits Change?
Every year mortgage loan limits are revised based on the house price index(HPI) as per the Housing and Economic Recovery Act (HERA). The act sets the baseline mortgage loan limits for government-sponsored enterprises(GSEs).
The mortgage loan limit saw a jump since the HPI increased by 12.21% in the third quarter of 2023.
Why Do Loan Limits Matter?
When considering mortgage options, it’s important to understand your area’s mortgage loan limit. This limit determines whether you need a normal loan or a jumbo loan. A jumbo loan typically has stricter qualification standards than a conforming loan.
Bottom Line
Mortgage loan limits have gone up in 2023. This increases the purchasing power of new home buyers.
Furthermore, an increased loan limit allows home buyers to purchase their dream homes without a jumbo loan!
Find Your New Home With Houzeo
With thousands of property listings, Houzeo.com is one of the biggest property listing sites in the US. Find condos, townhouses, co-ops, and other types of homes for sale on Houzeo.
» Need More Clarity? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.
Frequently Asked Questions
Has Fannie Mae announced 2023 loan limits?
Yes, Fannie Mae has announced 2023 limits. The new limit is $726,200 for most of the country.
What is the jumbo mortgage limit for 2023?
As of January 1, 2023, the FHA raised the jumbo loan limits. The 2023 FHA jumbo loan for single-family is $472,030, and the maximum is $1,089,300.
Will mortgage loan limits increase in 2024?
The increase in loan limits is projected approximately at 3.28% in 2024. This could take new mortgage loan limit to $750,000.
How banks determine mortgage loan amounts?
Banks base their home loan qualifications on both your total monthly gross income and your monthly expenses.
