FHFA conforming loan limits increase to $766,550 in 2024...what you need to know!
The baseline conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac in 2024 will be $766,550, up 5.5% compared to the current limit of $726,200, the Federal Housing Finance Agency (FHFA) announced Tuesday.
Conforming loan limits are increasing at a slower pace, mirroring home prices, overall.
That’s because the FHFA’s conforming loan limit increase is based on a formula related to home-price data in the third quarter of each year. The regulator compares home prices year over year and adjusts the limit by the corresponding amount.
In 2022, the housing market was a little hotter than this year due to lower mortgage rates, pushing home prices up. Ultimately, the FHFA announced a 12.21% increase in loan limits for 2023. Moreover, for the first time, the federal government backed mortgages north of $1 million.
However, home prices increased 5.56% on average between the third quarters of 2022 and 2023. This is why the baseline conforming loan limit is going up in 2024 by the same percentage, the FHFA said in a statement.
The conforming loan limit increase will help buyers more easily finance one-unit homes at the higher end of the price scale. These loans would normally end at the jumbo market, which is dominated by banks. However, depositaries will be challenged by increased capital requirements in the coming years.
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