A 12% increase in the conforming loan limits for 2023 raised the baseline loan limit for a single unit to $726,200 in most counties in the United States.
The adjustment is a result of a change in the average price of a home nationwide from the third quarter of 2021 to the third quarter of 2022. Home prices increased an average of 12.21%, and the baseline conforming loan limit kept pace.
Conforming loans may be cheaper than nonconforming loans like jumbo mortgages, but jumbo loans have their place.
Conforming Loan Limits for 2023
The conforming loan limits set by the Federal Housing Finance Agency can vary based on area and the number of units in the property.
In most counties, that number increased to $726,200 in 2023 for a one-unit property. In high-cost areas, the limit is $1,089,300 for a one-unit property.
In general, here’s how the baseline conforming loan limits break down for 2023.
| Units | Many counties in the contiguous states, District of Columbia, and Puerto Rico | Alaska, Hawaii, Guam, and the U.S. Virgin Islands |
|---|---|---|
| 1 | $726,200 | $1,089,300 |
| 2 | $929,850 | $1,394,775 |
| 3 | $1,123,900 | $1,685,850 |
| 4 | $1,396,800 | $2,095,200 |
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Why Care About Conforming Loan Limits?
Staying under a conforming loan limit means you’ll most likely obtain a lower-cost mortgage. Mortgages that “conform” to the limits can be acquired by Fannie Mae and Freddie Mac, government-sponsored enterprises.
Because these mortgages can be bought by the agencies and then sold to investors on the secondary mortgage market, they represent a lower risk to the lender and a lower cost to the consumer.
If you need to finance more than the conforming limit, you’ll need to look at jumbo mortgage loans.
Getting a jumbo loan involves clearing more hurdles than a conforming loan. The rate will usually be similar to conforming loan rates, but sometimes it can be lower. How jumbo can a loan be for a primary residence, second home, or investment property? It’s up to each lender.
Government-backed mortgages are also nonconforming loans, and although they serve certain homebuyers, they also may be more expensive than conforming conventional loans because they usually come with additional fees.
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Notable Counties Above the Standard Loan Limits
Loan limits are higher in counties where the average home price is above 115% of the local median home value. The loan ceiling is 150% of the baseline value.
For 2023, the high-cost-area loan limit increased from $970,800 to $1,089,300 on a one-unit property. Alaska, Hawaii, Guam, and the U.S. Virgin Islands also have a baseline loan limit of $1,089,300.
The following is a chart of counties in high-cost areas with an increased baseline loan limit. The increased amount for high-cost areas is either maxed out at $1,089,300 or the average percentage of increase for the price of a home in the area.
| State | County | 2022 limit for a single unit | 2023 limit for a single unit | % change year over year |
|---|---|---|---|---|
| Alaska | All | $970,800 | $1,089,300 | 12% |
| California | Los Angeles County, San Benito, Santa Clara, Alameda, Contra Costa, Marin, Orange, San Francisco, San Mateo, Santa Cruz | $970,800 | $1,089,300 | 18% |
| California | Napa | $897,000 | $1,017,750 | 13% |
| California | Monterey | $854,400 | $915,400 | 7% |
| California | San Diego | $879,950 | $977,500 | 11% |
| California | Santa Barbara | $783,150 | $805,000 | 3% |
| California | San Luis Obisbo | $805,000 | $911,950 | 13% |
| California | Sonoma | $764,750 | $861,350 | 13% |
| California | Ventura | $851,000 | $948,750 | 11% |
| California | Yolo | $675,050 | $763,600 | 13% |
| Colorado | Eagle | $862,500 | $1,075,250 | 25% |
| Colorado | Garfield | $856,750 | $948,750 | 11% |
| Colorado | Pitkin | $856,750 | $948,750 | 11% |
| Colorado | San Miguel | $756,750 | $862,500 | 14% |
| Colorado | Boulder | $747,500 | $856,750 | 15% |
| Florida | Monroe | $710,700 | $874,000 | 23% |
| Guam | All | $970,800 | $1,089,300 | 12% |
| Hawaii | All | $970,800 | $1,089,300 | 12% |
| Idaho | Teton | $970,800 | $1,089,300 | 12% |
| Maryland | Calvert, Charles, Frederick, Montgomery, Prince George’s County | $970,800 | $1,089,300 | 12% |
| Massachusetts | Dukes, Nantucket | $970,800 | $1,089,300 | 12% |
| Massachusetts | Essex, Middlesex, Norfolk, Plymouth, Suffolk | $770,500 | $828,000 | 7% |
| New Hampshire | Rockingham, Strafford | $770,500 | $828,000 | 7% |
| New Jersey | Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union | $970,800 | $1,089,300 | 12% |
| New York | Bronx, Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester | $970,800 | $1,089,300 | 12% |
| New York | Dutchess, Orange | $726,525 | $726,525 | 0% |
| Pennsylvania | Pike | $970,800 | $1,089,300 | 12% |
| Utah | Summit, Wasatch | $970,800 | $1,089,300 | 12% |
| Utah | Box Elder, Davis, Morgan, Weber | $647,200 | $744,050 | 15% |
| Virgin Islands | All | $970,800 | $1,089,300 | 12% |
| Virginia | Arlington, Clarke, Culpeper, Fairfax, Fauguier, Loudon, Madison, Prince William, Rappahannock, Spotsylvania, Stafford, Warren, Alexandria, Fairfax City, Falls Church City, Fredericksburg City, Manassas City, Manassas Park City | $970,800 | $1,089,300 | 12% |
| Washington | King, Pierce, Snohomish | $891,250 | $977,500 | 10% |
| Washington D.C. | District of Columbia | $970,800 | $1,089,300 | 12% |
| West Virginia | Jefferson County | $970,800 | $1,089,300 | 12% |
| Wyoming | Teton | $970,800 | $1,089,300 | 12% |
Will Conforming Loan Limits Rise or Fall?
The baseline conforming loan limit is adjusted each year to reflect the change in the average home value in the United States.
The conforming loan limit has increased in six of the past 10 years and has never declined. From 2006 to 2016, for example, the conforming loan limit remained at $417,000, despite declining home values across the country. If home values continue to rise, the conforming loan limit will also rise.
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Conforming Loan Limits Over the Past 10 Years
The 12% increase in loan limits for 2023 is lower than the 18% increase of 2022, which was the largest jump in the past 40 years. But it still represents an increase of $79,000 over the past year alone.
| Year | Amount |
|---|---|
| 2023 | $726,200 |
| 2022 | $647,200 |
| 2021 | $548,250 |
| 2020 | $510,400 |
| 2019 | $484,350 |
| 2018 | $453,100 |
| 2017 | $424,100 |
| 2016 | $417,000 |
| 2015 | $417,000 |
| 2014 | $417,000 |
The Takeaway
Conforming loan limits are intended to keep costs low for homebuyers. This means competitive pricing on mortgages, no matter what the housing market looks like each year.
If you’re looking to apply for a home mortgage loan, check out how SoFi can help. SoFi offers fixed-rate mortgages, and qualifying first-time buyers can put as little as 3% down.
If a supersized loan is needed, SoFi offers jumbo loans with as little as 10% down and no private mortgage insurance.
Check out the full range of SoFi Mortgages today.
Photo credit: iStock/marchmeena29
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Source: sofi.com