Good News for Home Buyers: The FHFA Mortgage Limit Is Going Up in 2024

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Although mortgage rates remain elevated, the borrowing limits for conforming loans are making it easier to finance a home purchase. Read on for the details. 

While there are several different types of mortgages in the United States, the most common are conforming mortgages — loans that meet the standards of Fannie Mae and Freddie Mac. Among other requirements, conforming mortgages can be made for no more than the conforming loan limits set by the Federal Housing Finance Agency (FHFA) each year.

Conforming loans are generally more straightforward to qualify for than loans that exceed the conforming limits (also known as jumbo loans). Since they are eligible for purchase by Fannie and Freddie, there is a specific set of standards when it comes to credit scores, down payment requirements, asset reserves, and more. On the other hand, jumbo loans represent more of a risk to the mortgage lender itself, so they tend to have higher approval standards.

In addition, conforming loans can be obtained with low down payments (as little as 3% in some cases). Jumbo lenders typically want a minimum of 10% down, although 20% is more common.

With that in mind, the FHFA recently announced the conforming loan limits for 2024, and they are increasing significantly.

The conforming loan limit is increasing

In 2023, the conforming loan limit is $726,200 in most of the United States for a single-family home. However, with home prices spiking higher in recent years, more buyers are surprised to find that a seemingly average home is falling into jumbo loan territory, making financing more challenging.

However, the limit is increasing by 5.5% in 2024. For single-family homes, the conforming loan limit is rising to $766,550 in most of the U.S. In higher-cost areas, the limit can be as high as $1,149,825. Some areas have a limit that falls between the two extremes, but in all cases, the conforming loan limit will be 5.5% higher than it was in 2023. You can use the full FHFA guide (link downloads PDF) to find the conforming mortgage limits in your area.

Conforming mortgage loans can be made for residential properties with as many as four units. And they can be used to finance primary residences, second homes, and investment properties. Here’s a quick guide:

It’s also worth noting that these are loan limits, not purchase limits. For example, if you purchase a home for $900,000, you can use a conforming mortgage as long as the amount you finance does not exceed the limit.

Mortgage rates are still high

To be sure, this doesn’t provide much relief from soaring housing costs. It simply makes it easier for many borrowers to obtain mortgage financing for homes that have become significantly more expensive over the past few years. Mortgage rates are still hovering in the mid-7% range for 30-year loans. But with the ability to use a conforming loan, the qualification process can be significantly easier.

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