BAM's Key Details
  • The Federal Housing Finance Agency (FHFA) announced new conforming loan limit values this week.
  • Most one-unit properties in the U.S. will have a new conforming loan limit of $726,200. The limit will increase to $1,089,300 in high-cost areas.

The Federal Housing Finance Agency (FHFA) announced new conforming loan limit (CLL) values yesterday.

Each year, CLL values are adjusted to reflect changes in the average U.S. home price. According to the FHFA House Price Index, home prices increased 12.21% from quarter three of 2021 and quarter three of 2022. Conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac will increase by the same percentage in 2023.

Conforming Loan Limit Values for 2023

The 12.21% increase brings the CLL value for one-unit properties to $726,200 for most of the United States. This is an increase of $79,000 from $647,200 in 2022. 

The loan limit is higher in high-cost areas—where 115% of the local median home value exceeds the baseline CLL. The new ceiling loan limit is set at 150% of the baseline loan limit. The ceiling limit for one-unit properties in high-cost areas will be $1,089,300. 

Special statutory provisions in Alaska, Hawaii, Guam, and the U.S. Virgin Islands create different loan limits. One-unit properties in these areas will have a baseline loan limit of $1,089,300. 

What does this mean for the industry?

We all know that rising home prices and mortgage rates have created issues with affordability. So, what type of impact with these increased loan limits have on the industry—and on buyers?

Byron Lazine asked agents for their thoughts in this post:

Here for it

The California Association of REALTORS® (C.A.R.) was quick to respond in favor of the increased loan limits, issuing this statement: 

C.A.R. applauds the FHFA for its continued commitment to homeownership by increasing the conforming loan limits. The higher limits will help make homeownership more accessible to Californians across the state and provide homebuyers with more financing opportunities. This year in California, nearly one out of every four homes sold between $1.25 million and $2 million were purchased by first-time homebuyers.

Jennifer Branchini

President, C.A.R.

Suggests the Market will Remain Strong

While not everyone is completely sold about the 12.21% increase in baseline limits, several pointed out this is a sign the market will remain strong. It doesn’t look like home prices will decrease in the next 12 months. 

Bad News Brewing

Others see the raised limits and consider the danger it could put buyers in.

Education is Critical

Finally, some pointed out that continued education for consumers is critical. Real estate agents and lenders must work together to ensure buyers don’t get a loan they can’t afford.

What are your thoughts on FHFA’s new loan limits? Head to BAM’s Instagram to let us know!