Mortgage Loan Limits Are On The Rise

Last updated: January 2, 2024

Each year, the Federal Housing Finance Agency releases new loan limits for conforming loans that they base on the third quarter House Price Index report. New limits are out and they've gone up. VA loans use the same limits in the rare instances when one is required. FHA limits use a different formula based on the conforming loan limits.

There are three types of loans impacted by changes to mortgage limits that are either in effect now or will be at the beginning of 2024. Let’s run through them.

Conventional Loan Limits

Baseline conventional loan limits (also known as conforming loan limits) for 2024 have increased roughly 5.56%, rising $40,350 to $766,550 for one-unit properties. In Alaska and Hawaii, the limit for a one-unit property has risen to $1,149,825. Limits in high-cost counties are set on a county-by-county basis, but they'll never be higher than the limit in Alaska and Hawaii.

Limits are also higher based on the number of units in the home you’re buying. Here’s a table with the full breakdown:

These limits apply immediately to loans backed by the government-sponsored enterprises Fannie Mae and Freddie Mac. Rocket Mortgage^® clients don’t need to wait for 2024.

VA Loan Limits

Under normal circumstances, VA loans don’t have loan limits. In the event that you default on the loan, the VA insures the same percentage of the mortgage for lenders regardless of the loan amount.

However, there are a couple of instances where VA loan limits do come into play. Where that’s the case, the limits listed above apply.

You might have a loan limit if you have what’s called impacted entitlement. In this case, part of your veteran benefit from the VA is shown as used up. You may have this if you have a VA loan that hasn’t been fully paid back or if you had a foreclosure that you haven’t paid the VA back for, for example.

If lenders think that a loan is large enough that it presents a slightly higher risk, they may also have different qualification requirements. While there’s no specific loan amount at which these VA jumbo loans start, many lenders including Rocket Mortgage use anything above conforming loan limits in the area as a guide. At Rocket Mortgage, you can get a VA jumbo loan for up to $2.5 million if you qualify.

FHA Loan Limits

FHA loan limits are updated at the beginning of each calendar year and effective January 1. Below we've listed the minimum and maximum loan amounts on a national level for residential properties with up to 4 units.

Before looking at these, it’s important to note how the limits on FHA mortgages work. The absolute lowest your own loan limit can be is 65% of the national conforming loan limit, which for a 1-unit property in 2024 is $498,257. However, loan limits are set entirely at the county level, so in many areas it’s going to be higher. Alaska and Hawaii have their own higher loan limits because of the higher cost of construction.

FHA loan limits for 2024 have been announced based on the new conforming limits. The limits in effect January 1, 2024 are here for your reference:

If you’re looking to find the limits in your area, the Department of Housing and Urban Development has a mortgage limits search engine. Although ostensibly for FHA mortgage limits, you can also see conforming limits by selecting “Fannie/Freddie” under limit type. To see the limits for this year, be sure to also select “CY2024” for the limit year.

The conforming loan limit in your area is important because amounts above conforming loan limits represent jumbo loans. While a Jumbo Smart loan from Rocket Mortgage has several benefits as compared to the jumbo loan options offered by other lenders, including a lower down payment requirement and no required mortgage insurance, you’ll still have to meet stricter qualification standards than you would on a conforming loan.

Additionally, you may be able to get a lower rate on a conforming loan than you could on a jumbo loan because investors may be looking to be compensated for the increased risk of a bigger loan amount. It should be noted that this isn’t always the case and it depends heavily on investor appetite in the market at any given moment.

Loan limits that have generally gone up across the country mean that people should be able to afford more home without having to deal with the additional qualification requirements necessary to get a jumbo loan. With loan limits up more than 5% for a conventional loan, this represents a major increase in your purchasing power.

If you’re interested in checking out your loan options, you can apply online.