What are the conforming loan limits for 2024?

If you're buying your first home, you probably know that your financial situation affects how much you can borrow with a mortgage loan. But did you know that the type of mortgage you choose also helps determine your maximum loan amount?

Many hopeful home buyers want to get a conforming mortgage. In 2024, most borrowers can expect a conforming loan limit of $766,550. However, the limit may vary depending on where you live and how many units are on your property. And don't worry too much if you need to borrow more than the conforming loans allow, because you still have options.

Read more: Everything you should know as a first-time home buyer

In this article:

What is a Conforming Loan?

Before we discuss Conforming Loan Limits (CLL), you should first understand what a Conformed Loan is. A conforming loan is probably what you would call a “regular mortgage.” It is a type of conventional mortgage that follows Fannie Mae and Freddie Mac guidelines – including loan limits. Fannie Mae and Freddie Mac are government-sponsored enterprises (GSEs) supervised by the Federal Housing Finance Agency (FHFA).

Mortgage lenders often originate conventional loans and then sell them to the GSEs to free up cash to take on additional loans. Fannie Mae and Freddie Mac are prohibited by law from purchasing single-family mortgages with loan balances that exceed a specified amount or the applicable loan limit.

Ultimately, the GSEs package the loans they acquire into mortgage-backed securities (MBS), which are investments made up of many types of home loans. The GSEs either give MBS to the lender in exchange for the loans or sell the loans to investors. Investors like to buy conforming loans because they are considered safe because they meet GSE standards. In fact, Fannie Mae and Freddie Mac guarantee, for a fee, the principal and interest payments on the MBS they issue.

Baseline 2024 compliant credit limits

Each year, in accordance with the Housing and Economic Recovery Act of 2008 (HERA), FHFA updates the base loan limit to reflect the change in the average home price. The agency uses the House Price Index (HPI), which measures the average price changes in repeat home sales or refinances purchased or securitized by the GSEs.

The following values ​​reflect the base CLL for all loans originated to the GSEs in 2024 – even if the mortgage was originated before January 1, 2024.

“The larger the loan, the greater the risk. (Limits are intended to) help prevent over-indebtedness and foreclosures and maintain market stability,” Anna Smith, senior mortgage lending officer at Movement Mortgage, said via email.

“It should theoretically be easier for borrowers to obtain financing if there is less risk involved in lending,” Smith said. “When the risk is lower, there are typically less stringent underwriting standards, lower interest rates and overall easier lending practices.”

Yahoo note: Some select counties in the contiguous United States have higher maximum loan limits for conforming mortgages because they are high-cost areas. You can see the CLL in your county using the interactive map published by the FHFA.

Credit limit compliance history

The CLL is dynamic and adapts to trends in the real estate market. In the early 1970s, the base limit was just $33,000.

Here's a look at how it's changed over the last decade:

Conforming mortgage loan limits were the same for 2006 through 2016, but the FHFA has increased them annually since then.

“That means average home prices have continued to rise since then,” Smith said. “In years when home prices are flat or declining, the FHFA will not lower the conforming loan limit.”

What happens if you need to borrow more than the conforming loan limit?

If your dream home costs more than the CLL, you have several options. You could “… take out a smaller loan in addition to the first lien to keep the primary loan within conforming limits and still finance what you need,” Smith said. “That means you may pay higher interest and fees on the smaller piggyback loan, but otherwise get a nice, conforming loan.”

You can also apply for a jumbo loan, which is a conventional mortgage in excess of the CLL. Securing a jumbo loan can help you purchase the property while only incurring a single housing debt.

It may be more difficult to qualify for a jumbo loan than a conforming loan. “If lenders choose to lend in excess of these loan amounts, they are risking more of their own money because the (GSEs) do not insure these funds,” Smith said. “Jumbo loans can often be more complex than compliance because the institutions that lend this money often establish their own rules and regulations to manage their risk.”

Therefore, you may need a higher credit score, a down payment, and more than six months of cash reserves to qualify for this type of financing.

However, it's worth noting that more mortgage lenders tend to offer jumbo loans rather than piggyback loans.

Learn more: How much house can I afford? Use our free home affordability calculator.

Compliant Credit Limits 2024: FAQs

Should you borrow more than the appropriate limit?

If your target property costs more than this amount, you may want to borrow more than the applicable limit. However, you should make sure you can comfortably repay the larger debts before applying for a jumbo loan.

What is the difference between a conforming loan and a non-conforming loan?

A conforming loan is a conventional loan that meets Fannie Mae and Freddie Mac standards. On the other hand, a non-conforming loan is a mortgage that does not conform to GSE guidelines. A jumbo loan is an example of a non-conforming loan. Other examples include federal home loans, including FHA, VA and USDA loans.

Where can I find information about compliance with credit limits?

Current (and historical) conforming loan limits can be found on the FHFA website. The authority publishes the limit values ​​for the coming year several weeks before they come into force.

This article was published by Laura Grace Tarpley.