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One of the most common types of home loans is the conventional conforming mortgage.

One of the big perks of these loans is that they come with generous nationwide loan limits that are often higher than come with FHA loans. And, in some areas, conforming loan limits for a 1-unit home now approach $1 million.

And that’s important, because higher loan limits mean more potential buying power.

What's in this Article?

Conventional loan limits explained
What are the conventional loan limits in 2021?
What do I need to know about ‘conforming high-balance’ loans?
What if my dream home costs more than the conventional loan limit?
2021 conventional loan limit FAQs
Take the next step

[loan_year] conventional loan limits explained

Most conventional loans are conforming loans, meaning they conform to certain requirements set by the Federal Housing Finance Agency (FHFA – not to be confused with FHA, which is a different mortgage agency).

Among those requirements are loan limits, or the maximum amount for which a lender can approve a borrower in a given area.*

The FHFA sets limits according to the median home price in an area, so you can actually see serious differences even within the same state.

For instance, a home near Los Angeles is eligible for a higher conventional loan than in northern California's Humboldt County. That’s because home prices are different in these areas.

Any time you’re buying in an expensive market, such as Los Angeles, San Francisco, Denver, or other major metropolitan areas, loan limits could be higher.

The FHFA sets loan limits annually, which means that if home prices go up, so will the limits.

And in 2022, loan limits went up more than they have in any time in history. Read or play to learn more.

What are the conventional loan limits in [loan_year]?

The [loan_year] conventional loan limit for a single-family home is [loan_limit agency='fhfa' units='1' type='standard'], up over 18% from 2021, when the limit was $548,250.

These limits are available effective immediately, even before the new year.

This represents the largest one-year jump in history, and reflects the massive home price increases seen in 2021.

Loan limits are even higher for multifamily (2-4 unit) homes and in areas with higher-priced housing. High-cost cities and counties, and in Hawaii, Alaska, and some U.S. territories allow multi-unit home loans above $1.8 million.

[loan_year] Conventional loan limits

Property typeContiguous States; Washington, D.C. & Puerto RicoHigh-cost areas, Hawaii, Alaska, Guam & the U.S. Virgin Islands
Single-family home[loan_limit agency='fhfa' units='1' type='standard'] [loan_limit agency='fhfa' units='1' type='high-cost']
Duplex[loan_limit agency='fhfa' units='2' type='standard'][loan_limit agency='fhfa' units='2' type='high-cost']
Triplex[loan_limit agency='fhfa' units='3' type='standard'][loan_limit agency='fhfa' units='3' type='high-cost']
Fourplex[loan_limit agency='fhfa' units='4' type='standard'][loan_limit agency='fhfa' units='4' type='high-cost']

However, there are many areas that are between the "base" limit and the highest available. For example, Denver’s limit is $684,250 and in Seattle, it’s $891,250 for a 1-unit property.

Wondering what the [loan_year] conventional loan limits are in your area? Look it up on the FHFA’s conforming loan limits map.

Loan limits are also significantly higher in high-cost cities and counties, and in Hawaii, Alaska, and some U.S. territories.

What do I need to know about ‘conforming high-balance’ loans?

Conforming high-balance loans are for amounts higher than the standard [loan_year] nationwide limit of [loan_limit agency='fhfa' units='1' type='standard'], but at or below the increased limit for a high-cost area.

For example, Seattle has a [loan_year] limit of $891,250. So a loan of $800,000 would be considered a high-balance loan, since it’s more than the base nationwide limit but below the area limit.

Lenders have to follow strict rules when approving high-balance loans, including verifying that you have traditional credit and a credit score of 620 or higher. Because they are likely lending more money, and potentially increasing their risk, they can also add their own eligibility requirements, which may make it tougher to qualify.

If you don’t qualify for a conforming high-balance loan, you might consider increasing your down payment so you need to borrow less. You might also qualify to take out a second mortgage (also known as a “piggyback loan”) to lower the primary loan to the standard conforming limit.

Loan for home in Seattle, Wash. High-balance Base loan limit w/piggyback
Primary mortgage$800,000[loan_limit agency='fhfa' units='1' type='standard']
Second mortgagen/a$152,800

As an example, a buyer needs an $800,000 loan. She could get a first mortgage for [loan_limit agency='fhfa' units='1' type='standard'], the [loan_year] nationwide base limit. Then she could get a second mortgage for $152,800 to cover the entire amount while staying within standard conforming loan limits on the primary mortgage.

And if you need financing above the loan limits in your area? Then you may need a jumbo loan, which we’ll discuss in just a minute.

I live outside the continental US. Is my loan limit the same?

No, your maximum conventional loan amount isn’t the same. Alaska, Hawaii, Guam, and the U.S. Virgin Islands are designated high-limit areas, and therefore have limits 50% higher than the nationwide baseline limit of [loan_limit agency='fhfa' units='1' type='standard']:

  • Single-family home: [loan_limit agency='fhfa' units='1' type='high-cost']
  • Two-unit multifamily home: [loan_limit agency='fhfa' units='2' type='high-cost']
  • Three-unit multifamily home: [loan_limit agency='fhfa' units='3' type='high-cost']
  • Four-unit multifamily home: [loan_limit agency='fhfa' units='4' type='high-cost']

What if my home costs more than the conventional loan limit?

First, the home cost is not capped. Conforming loan limits are on the loan amount, not price. You can have a home price of $20 million as long as your down payment brings the loan down to the local conforming limit.

That being said, there are some options if your proposed loan amount is greater than your local limit.

Make a larger down payment

One option is to make a higher down payment. That way, your loan amount is within the conforming limit even if your home price is higher.

Let’s say the home you want to purchase costs $850,000, above the [loan_limit agency='fhfa' units='1' type='standard'] in your area. To remain inside the conventional loan limit, you’ll need to put down at least $202,800.

Before you get sticker shock at the cash you need to put down, take a breath. There are yet more options. You can get what’s called secondary financing to be able to afford the home.

Get a home equity line of credit (HELOC) aka 'piggyback mortgage'

To continue with the above example, let’s say that you have $100,000 to put down. You may be able to take out a second mortgage to cover the remaining $102,800.

Depending on your circumstances, this second loan can be a home equity loan or home equity line of credit (HELOC). Keep in mind since this is an additional mortgage, you may have to pay additional fees, and you'll have two separate payments to make each month.

You will also have to coordinate with the second mortgage lender to close on the same day as the primary mortgage. Some second mortgage lenders are accustomed to doing HELOCs for existing homeowners, where the closing date isn’t set in stone. Make sure the lender knows it’s for a home purchase with a specific closing date.

Choose a conforming high-balance loan or a jumbo loan

Also, like we mentioned before, you can also choose to find a conforming high-balance loan. These types of loans may have more strict requirements, such as a higher minimum down payment amount and lower debt-to-income ratios. They also may come with higher rates.

Then there are jumbo loans. A jumbo loan is a conventional mortgage, but it’s considered non-conforming. Technically, jumbo loans don’t have loan limits. Each bank or lender sets its own jumbo limits. Jumbo loans can go up to $10 million or more. They’re designed to help people buy high-cost and luxury homes.

Jumbo loans are only offered by private lenders and are not insured by the government or by Fannie Mae or Freddie Mac. Some lenders require down payments of 10-20%, though each company can set their own terms, so you may find some who accept a lower amount down. Oftentimes, credit score requirements are higher as well.

[loan_year] conventional loan limits FAQs

Will conventional loan limits increase in 2022?

Yes, 2022 conforming limits increased on November 30, 2021. Limits are set annually based on national home prices, which skyrocketed in 2021. As a result, the base nationwide loan amount increased nearly $100,000, or 18%, the largest dollar increase in history. The FHFA compares home prices reported in its House Price Index during the third quarter versus the third quarter of the previous year. In 2021, home prices had increased more than 18% compared to 2020, which lifted conforming limits by $98,950. There could be additional increases in 2023, based on home price appreciation during 2022.

Did 2022 conventional loan limits recently increase to $625,000?

No. Many lenders started offering conforming loans up to $625,000 starting in late-2021 in anticipation of a large increase for 2022. The official limit was still $548,250 when lenders began rolling out temporary higher limits. Lenders planned to hold these loans on their books until January, as they predicted (correctly) that they could sell them to Fannie Mae or Freddie Mac after the official loan limit announcement in November 2021.

What is a conforming loan?

A conforming loan is a conventional (non-government) mortgage that adheres or
conforms" to loan limits and other guidelines set by the Federal Housing Finance Agency (FHFA). These loans must meet the underwriting requirements of Freddie Mac and Fannie Mae, the government-sponsored enterprises that insure conforming loans.

What is a conforming high-balance loan?

A conforming high-balance loan is one that is between the nationwide baseline limit of $647,200 and the local limit for the county, up to $970,800 in some areas for 2022. In most counties, there are no conforming high-balance loans available since the local limit matches the nationwide limit. But in expensive markets like Seattle, San Francisco, and New York City, higher local limits apply.

What is the jumbo loan limit for 2022?

Technically there is no jumbo loan limit. Lenders can set their own jumbo loan limit, which can be upward of several million dollars. Jumbo loans are "non-conforming", meaning they do not need to conform to Fannie Mae or Freddie Mac standards. Banks can create their own limits and rules for these loans.

Take the next step

Qualifying for a conventional mortgage can be much easier if you make sure the home you want is well within the conforming loan limits. You may have an easier time finding a lender if you don’t need a high-balance or jumbo loan.

Of course, loan limits are only one aspect of buying a house — you’ll want to make sure your credit is in tip top shape, you have reliable income, and you’ve gotten your debts as low as you can before applying for a loan.

*Loan limits refer to the maximum loan amount allowed in a given area. But lenders will determine how much you can borrow based on your credit score, income, down payment, debt-to-income ratio, and other factors. The loan limit in your area caps the amount a lender can possibly lend you in a mortgage, but the number you qualify for may well be under the loan limit anyway.

Debt-to-income (DTI) ratio is monthly debt/expenses divided by gross monthly income.

Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.

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