Conforming Loan Limits 2024 By County: What You Need to Know
Conforming loan limits can be a key factor when you’re planning to buy a home. These limits, set annually by the Federal Housing Finance Agency (FHFA), determine the maximum amount homebuyers can borrow through loans backed by Fannie Mae and Freddie Mac. In 2024, these limits are expected to change in several regions, reflecting the rising home values across the country. This guide provides an overview of the conforming loan limits by county, what they mean for buyers, and how to navigate the borrowing process effectively.
What Are Conforming Loan Limits?
Conforming loan limits are the maximum loan amounts that Fannie Mae and Freddie Mac will purchase or guarantee. The limits are set annually by the FHFA based on the average home prices in each county. Applying for a loan within these limits is considered a conforming loan, making it easier to qualify, typically with lower interest rates. Going above these limits, however, requires a jumbo loan, which usually has stricter requirements and higher interest rates.
Why Do Conforming Loan Limits Vary by County?
Conforming loan limits are not the same nationwide. They vary by county to accommodate differences in housing costs. High-cost counties, such as those in parts of California, New York, and Hawaii, generally have higher limits than lower-cost areas. By adjusting the loan limits regionally, the FHFA aims to make housing more accessible in areas with higher living expenses while ensuring loans remain affordable in other regions.
How Are Conforming Loan Limits Calculated?
The FHFA calculates conforming loan limits each year based on nationwide home value changes. The national average price determines the baseline limit, and high-cost areas receive an adjusted maximum limit. In 2024, the baseline for a single-family home is expected to be higher than in previous years, reflecting the nationwide increase in home prices.
2024 Baseline Conforming Loan Limits for Single-Family Homes
The baseline conforming loan limit is expected to rise in 2024. In 2023, it was $726,200, but estimates for 2024 suggest an increase to accommodate current home prices. High-cost areas, however, can have limits up to 150% of the baseline, potentially reaching over $1 million for single-family homes.
High-Cost Counties: Higher Loan Limits
High-cost counties, which include cities like San Francisco, Los Angeles, New York City, and Honolulu, have higher conforming loan limits. These limits can be up to 150% of the baseline limit, ensuring that buyers in these regions have a better chance of securing conforming loans despite the higher costs of homes.
Jumbo Loans: What If Your Loan Exceeds the Limit?
If you need a loan that exceeds the conforming limit for your county, you will need to apply for a jumbo loan. Jumbo loans have stricter requirements, such as higher credit scores, larger down payments, and higher interest rates. This is because jumbo loans are riskier for lenders, as Fannie Mae or Freddie Mac does not back them. Understanding your county’s limit can help you avoid needing a jumbo loan.
How to Find Your County’s 2024 Conforming Loan Limit
To find your specific county’s loan limit, you can consult the FHFA’s website, which offers an interactive map and limit search feature. These resources can help you confirm the loan limits in your area and prepare for your mortgage application.
Conforming Loan Limits for Different Property Types
Conforming loan limits aren’t only for single-family homes. Limits also apply to two-unit, three-unit, and four-unit properties, with higher amounts allowed for each additional unit. For instance, a duplex may have a limit higher than a single-family home in the same county, making it easier for investors to purchase multi-family properties under conforming terms.
Benefits of Staying Within Conforming Loan Limits
Conforming loans often come with lower interest rates, lower down payment options, and more flexible qualification requirements than jumbo loans. It could make your home purchase more affordable and attainable if you can stay within your county’s limit.
Loan Limits for Different States
Due to regional housing costs, loan limits are often higher in states like California, New York, and Massachusetts. Counties in these states often see elevated limits for single—and multi-family properties. Meanwhile, states with lower housing costs, such as Ohio and Texas, generally adhere to the baseline limits.
Tips for Buyers in High-Cost Counties
When purchasing a property in a high-cost county, expect to pay more monthly because of the bigger loans. Review the differences in rates that apply to conforming loans and jumbo loans. Also, look for other loan types, such as FHA or VA loans, with more attractive limits, even if they are more expensive.
Adjustments to Expect in the 2024 Conforming Loan Limits
As part of its annual mandate, FHFA examines housing market conditions in the country and revises both the baseline and high-cost limits. Given inflation and the rise in house prices, these limits will most probably be raised in 2024. This increase might benefit buyers willing to step into the market but do not want to qualify for a jumbo loan.
Potential Challenges with Conforming Loan Limits
Conforming loans are advantageous but might not be sufficient for all buyers in expensive locations. Even with high conforming limits for the cities, those buying homes in such densifying cities will likely realize that the warm winter loan is still insufficient. This may constrain some lending and call for inventive ways of raising the required funds.
Frequently Asked Questions
- What is the baseline conforming loan limit for 2024?
The baseline limit for a single-family home is expected to increase from $726,200 in 2023, though the FHFA will finalize the exact numbers. - Why do conforming loan limits vary by county?
These limits vary based on local housing costs to make borrowing more accessible in high-cost areas. - What happens if I exceed my county’s conforming loan limit?
Exceeding the limit means you’ll need a jumbo loan with stricter requirements and higher interest rates. - Can I get a conforming loan for a multi-family property?
Yes, but limits vary by property type. Multi-unit properties have higher limits than single-family homes. - How can I find the conforming loan limit for my county?
Visit the FHFA’s website, which offers a searchable map and list of 2024 loan limits by county. - How often do conforming loan limits change?
The FHFA reviews and adjusts limits annually based on the housing market and home price trends.
Final Thoughts
Knowing the conforming loan limits for 2024 can be quite invaluable when you are deciding on purchasing a home. These limitations vary by county and are reviewed annually, and they determine how much you can borrow under good terms. Limiting yourself within the conforming limits can also reduce the overall borrowing cost because of reduced interest rates. It also has a simpler qualification process than that of jumbo loans. Be sure to check your county’s particular limit so that it assists you in planning your budget and mortgage appropriately.
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