Will Conventional Loan Limits Increase in 2024?
According to our research, conventional (conforming) loan limits could rise 3.9% to $754,500 in 2024, up from $726,200 in 2023. Read on to see how we arrived at this estimate and why it could end up higher or lower.
Each year, the Federal Housing Finance Agency (FHFA) reviews home prices over the previous year to determine conventional loan limits for the upcoming year.
For 2024, the FHFA will review its House Price Index, or the “FHFA HPI®”, to determine new limits. Will those limits rise from 2023 levels?
How Conforming Loan Limits Are Determined
Conforming loan limits are the maximum loan amounts for Fannie Mae- and Freddie Mac-eligible loans.
Each year, The FHFA determines conforming loan limits by comparing year-over-year home price changes. Specifically, it compares third-quarter home prices from the previous year to third-quarter prices for the current year to set next year’s loan limits.
For example, the FHFA will review home price changes from Q3 2022 to Q3 2023 to arrive at 2024 conforming loan limits.
The official announcement is usually made in late November each year.
Will 2024 Conventional Conforming Loan Limits Increase?
As of this writing (toward the end of the third quarter), there is no third-quarter data because it’s not over yet.
However, we may be able to gain some insights by looking at year-over-year data for Q2.
According to FHFA, 2023 loan limits were determined as such:
Percentage change
= (2022Q3 HPI – 2021Q3 HPI) / 2021Q3 HPI
= (369.50228847 – 329.29910809) / 329.29910809
= 12.20871220 percent
This calculation determined that the conforming loan limit should rise 12.2% from 2022 to 2023.
If we take the same formula using the most recent data available (2023 Q2), here’s what it looks like.
Percentage change
= (2023Q2 HPI – 2022Q2 HPI) / 2022Q2 HPI
= (379.68 – 365.37) / 365.37*
= 3.9 percent
If 2024 loan limits were based on 2023 Q2 data, the conforming loan limit might increase 3.9%, from $726,200 in 2023 to $754,500 in 2024.
Under this same logic, high-cost loan limits would increase from $1,089,300 in 2023 to roughly $1,131,750 in 2024 (high-cost limits are set at 150% of the standard limit).
In total, here’s what 2024 conventional loan limits would look like under the above assumptions.
Units | Standard Area Limits 2024 Estimate | Maximum High-Cost Limits 2024 Estimate |
1 | $754,500 | $1,131,750 |
2 | $966,100 | $1,449,150 |
3 | $1,167,700 | $1,751,550 |
4 | $1,451,300 | $2,176,950 |
Keep in mind that a lot can happen in a quarter. Since 2024 limits will be based on Q3 data, there could be a larger or smaller increase, or no increase at all.
Can 2024 Conventional Loan Limits Decrease?
New 2024 conventional loan limits can not decrease, according to the FHFA. It follows rules that say conforming loan limits may not decrease even if its home price index decreases.
Instead, conventional loan limits would remain constant until home prices declined and rebounded to reach their previous highs. Only when home prices exceeded previous highs would loan limits start increasing again.
Likewise, a high-cost county that experienced a median home price decrease would keep its loan limit until prices rose to previous levels.
Should You Wait Until 2024?
Home prices are continuing to rise despite high rates. Waiting until 2024 to capture a larger conventional loan limit could end up costing you.
It might be a better move to use a jumbo loan now if you qualify. Then, there’s a potential to refinance into a conventional loan in 2024 if loan limits increase.
*(Note that loan limits are based on FHFA’s expanded-data indexes, which is why the above figures differ from commonly cited HPI numbers)
Tim Lucas spent 11 years in the mortgage industry and now leverages that real-world knowledge to give consumers reliable, actionable advice. Tim has been featured in national publications such as Time, U.S. News, MSN, The Mortgage Reports, My Mortgage Insider, and more.
