The Federal Housing Finance Agency (FHFA) has formalized the new conforming loan limits for 2023. In most parts of the country, there is a cap of $726,200 on single-unit properties.
According to Fannie Mae and Freddie Mac, the conforming loan limit represents the maximum loan amount they will guarantee. Using the Average Home Price in the United States as a benchmark, the limit is adjusted annually under the Housing and Economic Recovery Act.
The adjustment is made per county, with the maximum limit in most counties getting bumped up by the average percentage rise in national home prices. According to the FHFA’s House Price Index report, this increase was 12.21% in the third quarter of 2022.
In other words, most of the country will see its conforming loan limit rise by $79,000 from $647,200 next year, which isn’t surprising given that home values have been rising rapidly since last year. All U.S. counties or county-equivalents will have higher conforming loan limits due to ever-increasing home values.
Caps will be even higher in some counties than the baseline limits. In places designated by the FHFA as high-cost areas, or in areas where 115% of the local median home value is greater than the baseline conforming loan limit, applicable loan limits are higher. This includes parts of the San Francisco Bay Area, Los Angeles, Washington, D.C., and New York City, among other areas. Next year, the one-unit property loan ceiling for these regions will be 150% of the baseline conforming loan limit.
Also included in this figure are loan limits for Alaska, Hawaii, Guam, and the US Virgin Islands, which each have their own legal limits.