New 2024 Conforming Loan Limits and Why They Matter

In a perfect world, we’d all be able to buy our dream home with cash on hand. (Well, that’s not perfect for us because we’re a lender!) But the vast majority of homebuyers borrow money to finance a home because it’s typically an amount far more than what they ever have at one time.

So, you may wonder why people borrow certain amounts for a mortgage – why not more? Or less? Who makes the rules? Well, now that the new 2024 conforming “loan limits” are here (PS – effective immediately!), let’s take a look at what happens behind the scenes, and what these updates mean for you as a homebuyer.

What Are Conforming Loan Limits?  

Conforming loan limits are a dollar cap on the amount of a mortgage that Freddie Mac and Fannie MaeGovernment-sponsored entities" (GSE) that manage the flow of credit to the U.S. economy’s housing sectors.Freddie Mac and Fannie MaeGovernment-sponsored entities" (GSE) that manage the flow of credit to the U.S. economy’s housing sectors. will guarantee. The Federal Housing Finance Agency (FHFA) regulates Fannie and Freddie and updates these limits annually in the fall. The limits reflect current home prices across the U.S. As home prices increase or decrease, loan limits respond accordingly.

Government-backed loan programs like Federal Housing Administration (FHA), United States Department of Agriculture (USDA), and Department of Veteran Affairs (VA) also have their own limits, set by their agencies annually.

2024 Conforming Loan Limits

As we’ve mentioned, “conforming” loans meet the FHFA loan limits and Fannie/Freddie’s funding criteria. Buyers must have certain credit scores, debt-to-income ratiosThe percentage of your gross monthly income that is used to pay your monthly debt and determines your borrowing risk.debt-to-income ratiosThe percentage of your gross monthly income that is used to pay your monthly debt and determines your borrowing risk., assets, and other requirements for private lenders like Atlantic Bay to extend a mortgage.

The terms “conforming” and “conventional” are often used interchangeably, but there are some differences. All conforming loans are conventional loans, but conventional loans can be conforming or “non-conforming,” which means they don’t meet Fannie/Freddie funding criteria.

This isn’t a bad thing! Non-conforming loans can be either the government-backed loans we mentioned above, loans for more expensive properties (“jumbo loans”), or “non-qualified” mortgages specially designed for people who might have strong assets but have a past bankruptcy, or simply don’t have a traditional income profile, like retirees and the self-employed.

Which brings us back to conforming loan limits, which for 2024 will be $766,550 (up from $726,200 in 2023). 

How Do Higher Loan Limits Help Me?

This means now you can get a larger conventional loan while still benefiting from more flexible qualifying criteria and lower down payment options than with a jumbo loan, which can be tougher to qualify for. Jumbo loans also carry higher interest rates because they’re not backed Fannie and Freddie.

Again, non-conforming loans could be an option for you as well. Just because you’re a self-employed gig worker or a retiree with a past ding on your credit doesn’t mean you can't own a home! It all starts with asking us. Learn more here about getting pre-approved Atlantic Bay is here to help with your questions about loan limits or any other mortgage need. Give us a call!