Will Conventional Loan Limits Increase in 2024?
Update: Fannie Mae released 2024 loan limits on November 28, 2023. The standard limit for 1-unit homes is now $766,550, higher than our initial September prediction of $754,500. The below article has been updated to reflect actual 2024 conventional loan limits.
Each year, the Federal Housing Finance Agency (FHFA) reviews home price changes over the previous year to determine conventional loan limits for the upcoming year.
For 2024, the FHFA reviewed its House Price Index, or the “FHFA HPI®”, to determine new limits. The base loan limit increased to $766,550. This is 5.56% or $40,350 higher than the 2023 limit of $726,200.
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 reviewed home price changes from Q3 2022 to Q3 2023 to arrive at 2024 conforming loan limits.
The official announcement was made on November 28, 2023.
Will 2024 Conventional Conforming Loan Limits Increase?
Conventional conforming loan limits will increase in 2024. Most lenders are offering increased limits immediately.
According to FHFA, 2024 loan limits were determined as such:
Percentage change
= (2023 Q3 HPI – 2022 Q3 HPI) / 2022 Q3 HPI
= (392.04 – 371.4) / 371.4
= .05557 (5.56%)
This calculation determined that the conforming loan limit should rise 5.56% from 2023 levels.
The 2023 loan limit of $726,200 plus 5.56% equals the 2024 limit of $766,550.
Loan limits for 2-4 unit properties and high-cost areas were also increased for 2024, as follows.
Units | Standard Area Limits 2024 | High-Cost Limits 2024 |
1 | $766,550 | $1,149,825 |
2 | $981,500 | $1,472,250 |
3 | $1,186,350 | $1,779,525 |
4 | $1,474,400 | $2,211,600 |
Those looking to buy a higher priced home in 2024 are in luck. Conventional loans are now available in amounts over $1 million in many areas of the country.
Could 2024 Conventional Loan Limits Have Decreased?
Conventional loan limits can not decrease, according to the FHFA. It follows rules that say conforming loan limits may not go down even if its home price index falls.
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 rising 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. Most lenders are offering 2024 loan limits now, so there's no reason to wait until next year.
*(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, and more.
