Conforming Home Loan Limits for 2024

Why Limits Are Higher than 2023 & What It Means for You

Purchasing a new home has become easier and more attractive for prospective buyers. Riding on rising property values, the new conforming loan limits are in and much higher than expected. You may not have to wait to take advantage of them because many mortgage lenders have implemented the increase early. With this good news, homeowners can obtain better mortgage rates without taking out jumbo loans.

Conforming Loan Limits Increased for 2024

Every year, the Federal Housing Finance Agency (FHFA) adjusts the baseline conforming loan limit to stay on track with fluctuating housing prices.

The conforming loan limits have increased much higher than expected. The new conforming loan limit for 2024 has risen to $766,550 for single-family properties in most areas.

That’s an increase of $40,350 from the $726,200 loan limits for 2023. 

Of course, high-cost areas like Alaska and Hawaii have an even larger limit of $1,149,825.

The cap went up for multi-unit properties, too:

• Two unit properties: $981,500
• Three-unit properties: $1,186,350
• Four-unit properties: $1,474,400

How Much House Can You Buy With A Conforming Loan In Your Area?

The FHFA has a conforming loan limits map. You can also contact a local lender or real estate agent to discuss your options.

What Is a Conforming Loan?

A conforming loan is a mortgage that meets two criteria:

• The dollar limits set by the FHFA, and
• The funding criteria of Freddie Mac and Fannie Mae.

What’s The Big Deal With Conforming Loans?

Well, they’re advantageous for borrowers because they typically offer lower interest rates than other mortgage types. And that makes purchasing a new home more affordable, even for first-time home buyers.

How Conforming Loan Limits Work in 2024

The term “conforming” describes the mortgage amount, and the median home value determines conforming limits. It also refers to the funding criteria of Fannie Mae and Freddie Mac — government-sponsored entities that help control the mortgage market.

So, What’s The Point Of Conforming Limits?

The goal is to ensure and promote homeownership for lower- and middle-income Americans.

When calculating the conforming loan limit, the FHFA conducts a survey where lenders report how many loans were approved. Also, lenders report monthly interest rates, loan terms, and house prices depending on the property type and location.

Each county has its own conforming loan limit. The different amounts allow high property value areas to have a loan limit in line with average house prices. For example, while most areas in the U.S. have a limit of $766,550, the cap is set at $1,149,825 in Washington, D.C., where the median home value is higher.

What is the Median Home Value?

The median home value is the average price of house costs in a given region. Many factors influence a median home value — location, house size, and proximity to amenities like transport and schools. Each state has a different median home price. 

States with high median values typically have higher median household incomes. So, borrowers in those areas can generally afford the larger mortgage payments that accompany larger conforming loan limits.

Are Current Conforming Loan Limits Enough to Buy a House?

Buying a home is one of the biggest investments you’ll make. You’ll consider many factors before committing to a home loan. The good news is that increasing the conforming loan limit will make homeownership more accessible.

Yet, you still need to meet lender requirements before heading off to buy a home. It varies by lender, but qualifying for a conforming loan generally requires:

• A credit score minimum of 640
• A debt-to-income ratio of 45% or less
• A down payment of at least 3%

You Shouldn’t Have To Choose Between Lenders

Too many borrowers think they must choose between the convenience of an online lender and the hands-on service you might get from the “small guys.” But We Believe You Can Have It All! Let’s talk- Apply Now!

Can You Borrow More than the Conforming Loan Limit?

What if the house you want to buy is priced higher than the conforming loan limit? It’s still possible to get a mortgage. But instead of a conforming loan, you’ll need to take out a jumbo loan. A jumbo loan is a mortgage with higher maximums than conforming loans.

Jumbo loans usually require a minimum down payment between 10% and 15% of the home’s purchase price, with some lenders asking 20%. They cannot be guaranteed by either Fannie Mae or Freddie Mac, and buyers typically undergo rigorous credit checks.

What Are Current Mortgage Rates?

Mortgage rates have been lower in recent months.  Some people have taken advantage of the opportunity. Since rates change all the time, give us a call at 901-461-8858 for an up-to-date rate quote.

How Much Can You Borrow for a Home?

Most lenders suggest that you spend no more than 30% of your annual income on housing, including utility costs like heat, water, and electricity. The conforming loan limit increase to $766,550 means buyers won’t have to resort to jumbo loans. Instead, you can qualify for a conforming loan and pay lower rates.

Are you ready to purchase your dream home? Contact us, and we’ll match you with the perfect mortgage!