New Year, New Loan Limits
WHAT YOU'LL LEARN
What are loan limits?
The differences between conforming and conventional loans.
2023 loan limits for all programs.
WHAT YOU'LL LEARN
What are loan limits?
The differences between conforming and conventional loans.
2023 loan limits for all programs.
Thinking of buying a home this year, but not sure what maximum amount your loan program allows you to borrow? Well, read on to learn about the new 2023 loan limits!
What Are Loan Limits?
Put simply, loan limits are a dollar cap on the size of a mortgage that government agencies will back. The Federal Housing Administration (FHA), United States Department of Agriculture (USDA), and Department of Veteran Affairs (VA) each have their own limits, while the Federal Housing Finance Agency (FHFA) sets limits for “conforming” (conventional) loans that are then backed through Freddie Mac and Fannie Mae“Government-sponsored entities" (GSE) that manage the flow of credit to the U.S. economy’s housing sectors.Freddie Mac and Fannie Mae“Government-sponsored entities" (GSE) that manage the flow of credit to the U.S. economy’s housing sectors..
How Do Loan Limits Work?
The agencies above typically announce their annual loan limit changes near the end of each year (the limits can also go down). The changes reflect current home prices across the U.S. As home prices increase or decrease, loan limits respond accordingly.
Not all loan limits are alike. Rather than apply a blanket solution across urban centers and rural regions, agencies designate loan limits by a county’s income levels. So, higher-cost regions like New York and Hawaii have higher limits.
2023 Conforming Loan Limits
“Conforming” or conventional loans are not backed by the government but by private lenders like Atlantic Bay. The terms “conforming” and “conventional” are often used interchangeably, but in actuality, a conforming mortgage’s terms and conditions must meet Fannie Mae’s and Freddie Mac’s funding criteria. Meanwhile, although all conforming loans are conventional, not all conventional loans are conforming. Those conventional mortgages that surpass Freddie’s or Fannie’s limits are “jumbo” mortgages. Which brings us back to conforming loan limits. In most of the continental U.S., a loan must not exceed $726,200 in 2023 (up from $647,200 in 2022). This means now you can get a larger conventional loan while still benefiting from more flexible qualifying criteria and lower down payment options, instead of having to use a jumbo loan, which is typically harder to qualify for and carries higher interest rates because it’s not backed Fannie and Freddie. 2023 Conforming Loan Limits for all counties can be found at the FHFA Conforming Loan Limits webpage.
Government Loan Program Limits
If you are seeking an FHA, VA, or USDA loan, those limits, too, can be found on the program’s respective websites and searching by county:
VA Home Loan Limits: Remember, if you have full entitlement, you do not have a loan limit. If you have partial entitlement, your loan limit will typically correspond with the FHFA’s limits for conforming loans (in other words, $726,200).
Congratulations on preparing to buy a home — learn more here about getting pre-approved. As your trusted lender, Atlantic Bay will always help with your questions about loan limits or any other mortgage need. Give us a call!