What are conforming loan limits?
Conforming loan limits are the maximum mortgage loan amounts that Fannie Mae and Freddie Mac, two major players in the mortgage industry, are willing to securitize.
These limits act as guardrails, ensuring that lenders operate within specified boundaries with the support of these influential entities.
The Federal Housing Finance Agency
Serving as the guardian of conforming loan limits is the Federal Housing Finance Agency (FHFA). Established with the Housing and Economic Recovery Act (HERA), the FHFA adjusts the baseline conforming loan limits to reflect economic changes.
The FHFA reviews these conforming loan limits annually, and any adjustments typically take effect in January of the following year. New conforming loan limits are announced by the FHFA in November.
The FHFA House Price Index Report
The FHFA House Price Index Report acts as the barometer for the housing market. It tracks changes in home prices, providing insight into how the market is performing. The FHFA uses this index alongside various economic indicators to determine whether conforming loan limits should be adjusted.
The impact of conforming loan limits
Conforming loan limits significantly influence a range of home financing factors — particularly conventional and jumbo loans.
- Access to credit
Conforming loan limits have a significant role in expanding access to credit for homebuyers. When these limits are increased, more homebuyers become eligible for loans within these limits. This can be a game-changer if you’re planning to purchase a single-family home.
- Competitive mortgage rates
Mortgages within these limits typically offer more competitive interest rates. Since these loans enjoy the backing of Fannie Mae and Freddie Mac, lenders are more inclined to provide favorable interest rates. Securing a lower rate can lead to substantial savings over the life of your home loan.
- Guidance for real estate professionals
Real estate agents find it essential to know conforming loan limits when advising clients. A strong grasp of these limits empowers agents to offer more accurate guidance, streamlining the homebuying process for their clients.
Previous conforming loan limits
Understanding conforming loan limits is fundamental to appreciating upcoming changes and the overall trend in home prices. You can see conforming loan limits over the last four years in the graph below, which have continuously risen with home prices – increasing by over $300,000 since 2021.
| Year | Baseline conforming loan limits | High-cost areas loan limits |
| 2024 | $766,550 | $1,149,825 |
| 2023 | $726,200 | $1,089,300 |
| 2022 | $647,200 | $970,800 |
| 2021 | $548,250 | $822,375 |
High-cost areas
While most parts of the United States have uniform conforming loan limits, certain high-cost areas have slightly higher limits. These variations are in response to the unique housing markets in these regions, including Alaska, Hawaii, Guam and the U.S. Virgin Islands.
Of the 3,000 counties in the United States, roughly 100 – 200 qualify for a high-cost limit value that exceeds the baseline loan limit.
If you’re considering purchasing a home in either of these states or territories, understanding these limits could help you open the door to your new home.
2025 conforming loan limits
In November 2024, the FHFA announced new baseline conforming loan limits of $806,500. The maximum loan limit ceiling for high-cost areas will be $1,209,750. These new conforming loan limits will take effect in January 2025.
Early bird access
CrossCountry Mortgage’s Early Bird program honors the new agency conforming loan limits of $806,500 for the baseline limit and up to $1,209,750 for the highest-cost areas ahead of the new year.
In conclusion
From homebuyers poised for a new chapter to real estate agents helping clients on their quest for their dream homes, these limits are a fundamental piece of the puzzle.
In the world of mortgages, understanding conforming loan limits is like having a reliable roadmap for your journey toward homeownership. These limits open doors, granting you easier access to credit and competitive interest rates.
Whether you’re in Alaska, Hawaii, a high-cost area, or anywhere else, remember that conforming loan limits play a pivotal role in your homebuying experience.
