What Is the Conforming Loan Limit?

The conforming loan limit is the dollar cap on the size of a mortgage the Federal National Mortgage Association (known colloquially as Fannie Mae) and the 澳洲幸运5官方开奖结果体彩网:Federal Home Loan Mortgage Corp. (Freddie Mac) will purchase or guarantee. 澳洲幸运5官方开奖结果体彩网:Mortgages that meet the criteria for backing by the two quasi-government agencies are known as 澳洲幸运5官方开奖结果体彩网:conforming loans.

Under the mandate of the 澳洲幸运5官方开奖结果体彩网:Housing and Economic Recovery Act (HERA) of 2008, the conforming loan limit is adjusted every year to reflect changes in the average price of a home in the United States. The annual limit is set by Fannie Mae’s and Freddie Mac’s federal regulator, the 澳洲幸运5官方开奖结果体彩网:Federal Housing Finance Agency (FHFA), and announced in November for the next year. The FHFA uses the October-to-October percentage increase/decrease in the average house price, as indicated in the House Price Index report issued by the Federal Housing Finance Board (FHFB), to adjust the conforming loan limit for the subsequent year.

How the Conforming Loan Limit Works

The conforming loan limit is designated ♐by county. Most counties are assigned the baseline conforming loan limit. However, there can be variations in the conforming loan limit based on regional economic differences.

For example, in areas where 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit for that area will be set higher. The above-mentioned HERA sets the maximum loan limit for such areas as a multiple of the area median home value. The legislation also set a ceiling on the limit of 150% of the baseline loan limit.

Southern California, Virginia, and the greater New York metropolitan area are three examples of regions in the contiguous part of the country that satisfy the requirements for higher maximum conforming loan limits.

Furthermore, there are special statutory provisions within the HERA that establish different loan limit calculations for Alaska and Hawaii, as well as for two U.S. island territories: Guam and the U.S. Virgin Islands. The conforming loan limits for those areas tend to be notably higher than the limits for the domestic United States because they are designated high-cost areas.

Conforming Loan Limits 2024

For 2025, in most of the United States, the maximum conforming loan limit for one-unit properties (the baseline) is $806,500, up from $766,550 in 2024. This increase of $39,950 reflects the ongoing increase in housing prices experienced during 2024.

Conforming Loan Limi🥃💛ts in High-Cost Areas in 2025

Median home values rose in high-cost regions in 2024, driving up the maximum loan limits in many areas. The 2025 ceiling loan limit for one-unit properties in the highest-cost areas such as Alaska, Hawaii, Guam, and the U.S. Virgin Islands, is $1,209,750, or 150% of $806,500.

When announcing the new loan limits in November, the FHFA noted that the maximum conforming loan limit would be higher in 2025 in all but six U.S. counties.

S🅷pecial Considerations for the Confo☂rming Loan Limit

Fannie Mae and Freddie Mac are the principal market makers in mortgages. Banks, 澳洲幸运5官方开奖结果体彩网:credit unions, and 澳洲幸运5官方开奖结果体彩网:mortgage lenders count on Fannie and Freddie to insure their loans to 澳洲幸运5官方开奖结果体彩网:homebuyers and buy them when needed. The conforming loan limits act as guidelines for the mortgages offered by mainstream lenders. In some cases, 澳洲幸运5官方开奖结果体彩网:financial institutions ꦛwill only deal with conforming loans that meet the agencies’ criteria.

Mortgages that exceed the conforming loan limit are known as 澳洲幸运5官方开奖结果体彩网:nonconforming or 澳洲幸运5官方开奖结果体彩网:jumbo mortgages. As a result, 澳洲幸运5官方开奖结果体彩网:jumbo mortgages typically carry a higher interest rate than conforming mortgages to compensate the lender for the added risk o🦋f the higher loan amount.

Because lenders prefer conforming mortgages, a borrower whose mortgage amount slightly exceeds the conforming loan limit could reduce the loan size through a larger down payment. A borrower could also take out a second mort🅺gage for the amount over the limit—take out two loans instead of one—to qualify for a conforming mortgage.

The Bottom Line

Conforming loans do not exceed Fannie Mae's and Freddie Mac's dollar caps. The limit for 2025 is $806,500, and this figure is set every year in November by the FHFA. Fannie Mae and Freddie Mac will insure loans that meet this standard and buy such loans from lenders—but Fannie Mae and Freddie Mac do not issue loans themselves.