Mortgage loan limits have been announced for both conventional mortgage loans (Fannie Mae & Freddie Mac), as well as for FHA loans. Each year, maximum loan limits are established for these programs based on median home prices. For 2024, loan limits have been increased across the board for the majority of areas, with a small handful of areas seeing reduced loan limits on the FHA loan product. This reflects growing home prices across the US, and opens up access to additional credit for many borrowers as affordability continues to be a challenge in housing markets across the US.

How Do Higher Loan Limits Help?

With loan limits set to rise for 2024, it allows more flexibility for many home owners and home buyers. For those buying homes with purchase prices above the loan limits, it could help reduce the amount of cash needed to buy. For example, if someone was buying an $800,000 home in an area with baseline loan limits in 2023 of $726,200, they'd have needed to bring $75,800 (nearly 10%) as a down payment to bridge the gap between purchase price & loan limit for 2023. With baseline loan limits increasing to $766,550 in 2024, the same borrower would need to have only 5% down, allowing them to save about $40,000.

For homeowners, increased loan limits can also mean more access to cash. For example, let's consider a home worth $1.5 million. While well above the price of homes in many areas, some areas of the country have median home prices well over $1 million. For these home owners, the amount of equity they can access at competitive rates is often limited by loan limits, so increased limits = more flexibility and options in accessing their equity at more competitive rates.

FHA Loan Limit Increase Information

FHA loans are mortgage loans insured by HUD, and also fluctuate in loan limits based on area median home prices. FHA loans often have loan limits slightly lower than conventional loan limits, but increased to this program's loan limits are vitally important because FHA often serves first time home buyers (not because it's a better or worse loan, but because guidelines are more flexible allowing more people to meet requirements). For 2024, the base FHA loan limit will be just under $500,000, with many counties varying from that number based on local home prices. This should give home buyers more flexibility in their financing and allow them to finance enough to keep up with rising home prices in many entry level markets.

High Cost Areas

For both conventional and FHA loans, loan limits are higher in areas deemed "high cost". In some high cost areas of the US, conventional loan limits are now north of $1 million for single unit properties, with loan limits north of a whopping $2 million for 4 unit properties in some high cost areas (loan limits vary between these ranges in different areas, you can reach out to us for details on your specific market!). It's important to note that while these "high balance" loans allow more flexibility and access to funding in areas where prices are very high, these products often come with slightly higher rates, but even in high cost areas, if borrowers stay below the "high balance" threshold they'll see lower rates even in high cost areas.

Overall, 2024 mortgage loan limits going up will offer access to home ownership to more people, and will allow home owners more access to the equity they've accumulated in their homes. An increase to loan limits indicates a healthy housing market, with limits increasing only slightly this year, showing that home values continue to rise but at more healthy, sustainable levels than seen in 2020 and 2021.

If 2024 is the year you decide to buy a home, or you think refinancing may help you reach your goals in 2024, we'd love the opportunity to work with you! Our goal is simple - to help you reach your goals, so if your 2024 goals involve home financing, we'd love to be on your team in accomplishing those goals! Feel free to reach out with any questions or give me a call directly at 484.680.4852.