As home prices continue to rise, consumers are getting a break from the Federal Housing Administration who regulates the loan limits for conforming and government guaranteed loan programs.
Home loans are categorized into government guaranteed, conforming, and jumbo lending products. As the name suggests, jumbo loans are larger loan amounts for more expensive properties and multi-unit dwellings. These larger loans will have higher interest rates and require larger down payments due to the risk associated with the loan. So, being able to utilize government conforming loans can save homebuyers thousands of dollars over the life of the loan.
According to NAR, starting in 2024, the new conforming loan limit will increase to $766,550; an increase of $40.350. The new maximum loan value for FHA will increase to $498,257, which is an increase of $60,000. These baseline values are guaranteed by the federal government and designed to give homebuyers more choice and buying power to compensate for the higher home prices.
It’s good to note also that in more expensive areas, the conforming loan limit is even higher. For example, in California, New York, District of Columbia, and Hawaii the conforming loan limit will be $1,149,825.
Government guaranteed loans offer strong value to homebuyers. Not only are they easier to qualify for, but they also require lower down payments and lower interest rates than jumbo or non-conforming loans. As home values continue to rise, the increase in loan limits will allow homebuyers to find an affordable home and payment.