Waterfront Houses in Capitola California USA U.S. median home prices continue to increase – so it is no surprise that the Federal Housing Financing Agency (FHFA) has increased the Conforming Loan Limits significantly.

Conforming loan limits refer to the maximum loan amounts that Fannie Mae and Freddie Mac will allow for financing for one, two, three and four-unit properties.

The two tables below show the current Conforming Loan Limits and the previous year’s limits for comparison.


Low Cost Counties

NUMBER OF UNITS:1 Unit2 Units3 Units4 Units
LOAN AMOUNT:$647,200 $828,700 $1,001,650 $1,244,850

High Cost Counties

NUMBER OF UNITS:1 Unit2 Units3 Units4 Units
LOAN AMOUNT:$970,800$1,243,050 $1,502,475 $1,867,275


Low Cost Counties

NUMBER OF UNITS:1 Unit2 Units 3 Units 4 Units
LOAN AMOUNT: $510,400 $653,550 $789,950 $981,700

High Cost Counties

NUMBER OF UNITS:1 Unit2 Units3 Units4 Units
LOAN AMOUNT:$765,600$980,325$1,184,925$1,472,550


Conforming loans are those that “conform” to Fannie Mae and Freddie Mac underwriting guidelines.

The Conforming Loan Limits are set by the Fannie and Freddie regulating agency (FHFA) and are based on an extensive analysis of median home prices.

In so called “high cost” metro areas (where the median home price is higher than average), the loan limits are higher than they are in “low cost” areas.

High Cost areas include most of the San Francisco Bay Area, much of Southern California along the coast, New York City, and Washington, DC.

The entire states of Texas and Arizona are low cost areas.

Here are some of the reasons why “Loan Limits Matter:”

  1. Lower Down Payments. Competitive jumbo financing (required for any loan that exceeds the conforming loan limit) requires at least 20% down. In sharp contrast, the most competitive conforming financing is available with as little as 5% down.
  2. Appraisal Waivers and/or Limited Appraisal Requirements. Appraisal waivers are becoming more and more common for conforming financing, as more and more properties end up in Fannie and Freddie’s database (a requirement for an appraisal waiver). In addition, Fannie and Freddie are becoming more flexible with respect to appraisal inspections in general in our post-COVID world.
  3. More Flexible Underwriting Guidelines. Conforming loan guidelines are much more flexible in general than jumbo guidelines, allowing for high debt ratios, less reserves, lower credit scores, smaller down payments, and much else.
  4. Faster Closes. Because conforming loans have less stringent underwriting and appraisal requirements, we can close them in 14 days. In contrast, we need at least 21 days to close every jumbo loan.
  5. Lower Interest Rates. While it is true that some jumbo lenders, including JVM, now offer jumbo rates as low as their conforming rates, many (if not most) loan officers do not have access to the most competitive jumbo investors. When that is the case, conforming interest rates are much lower than the available jumbo rates.


While the mortgage industry, regulators and politicians tout higher conforming loan limits as a boon for homebuyers because the higher limits give more buyers access to better financing, the inevitable effect of higher loan limits is higher home prices, unfortunately.

This is because higher loan limits are effectively a subsidy that enable homebuyers to pay more for a home than they otherwise could (without the subsidy) and this invariably pushes up prices (just like student loan and college aid subsidies pushed up tuition prices).

So, this might be one more reason to buy sooner rather than later – before this latest “subsidy” pushes prices up even higher.

Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167

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