Conforming Loan Limits
Conforming loan limits set the maximum mortgage size that Fannie Mae and Freddie Mac will purchase from lenders — a threshold that determines whether your mortgage falls into the conventional market (conforming) or the higher-cost jumbo market. For 2026, the baseline limit is $832,750 for a single-family home in most U.S. counties. In high-cost housing markets, the limit rises to up to $1,249,125 (150% of the baseline). Mortgages below these limits can be sold to Fannie or Freddie, giving lenders confidence to offer standardized rates and terms; loans above them are "jumbo" mortgages, which typically require larger down payments (often 20%), better credit profiles, and carry slightly higher interest rates. The limits are adjusted annually based on FHFA's house price index — they've risen sharply in recent years tracking home price appreciation. Whether your purchase falls above or below the conforming limit is a significant practical decision point: crossing into jumbo territory can add 0.25-0.5% to your interest rate and require additional documentation, though the gap between conforming and jumbo rates has narrowed significantly since 2020.
Current Law (2026)
Conforming loan limits determine the maximum mortgage size that Fannie Mae and Freddie Mac will purchase. Loans above these limits are "jumbo" loans with different pricing and requirements.
| Parameter | 2026 Value |
|---|---|
| Baseline limit (most counties) | $832,750 |
| High-cost area ceiling (150% of baseline) | $1,249,125 |
| Alaska, Hawaii, Guam, USVI | $1,249,125 (automatic high-cost) |
Legal Authority
- 12 U.S.C. § 1717(b)(2) — Fannie Mae conforming loan limit: sets the maximum mortgage principal that the Federal National Mortgage Association may purchase
- 12 U.S.C. § 1454(a)(2) — Freddie Mac conforming loan limit: parallel provision for the Federal Home Loan Mortgage Corporation
- 12 U.S.C. § 4545 — Fair housing requirements for GSEs: Fannie Mae and Freddie Mac may not discriminate in mortgage purchases based on race, color, religion, sex, handicap, familial status, age, or national origin
- 12 U.S.C. § 4511 — Establishment of the Federal Housing Finance Agency (FHFA as independent regulator of Fannie Mae, Freddie Mac, and Federal Home Loan Banks; authority to set conforming loan limit formula)
- HERA (2008) — Housing and Economic Recovery Act: established the current formula linking limits to FHFA House Price Index, created FHFA as regulator
Implementing Regulations (CFR)
- 12 CFR Part 1026 (Regulation Z) — Truth in Lending Act mortgage provisions (Loan Estimate and Closing Disclosure requirements applicable to conforming and jumbo mortgage transactions)
How It Works
The Federal Housing Finance Agency (FHFA) adjusts conforming loan limits each November for the following year using the FHFA House Price Index: the baseline rises by the same percentage that national home prices rose in the prior year, and limits can only go up — they are legally protected from declining even if home prices fall, a floor established by HERA 2008. The 2026 baseline of $832,750 reflects cumulative appreciation tracking the post-pandemic home price surge, up from $548,250 in 2021. A county qualifies for a higher limit when the local median home price exceeds 115% of the baseline, with the limit set at 115% of local median, capped at 150% of the national baseline — $1,249,125 for 2026 (12 U.S.C. § 4511); Alaska, Hawaii, Guam, and the U.S. Virgin Islands automatically receive the ceiling by statute. FHFA publishes a county-by-county table every November — limits vary within metro areas, so one county can be at $1,249,125 while an adjacent county sits at the baseline. The conforming advantage flows from secondary market access: lenders who originate conforming mortgages can sell them to Fannie Mae (12 U.S.C. § 1717(b)(2)) or Freddie Mac (12 U.S.C. § 1454(a)(2)), which package them into mortgage-backed securities for global investors — a liquidity mechanism that translates into lower rates. Jumbo mortgages above the limit stay on lenders' balance sheets or enter a smaller private secondary market, typically adding 0.25–0.5 percentage points to the rate, requiring 740+ credit scores, and demanding larger down payments (10–20% rather than the 3% minimum Fannie/Freddie allow for first-time buyers).
Conforming limits apply not just to single-family homes but also to owner-occupied 2-, 3-, and 4-unit properties at higher thresholds — approximately $1,066,000 for 2-unit, $1,288,500 for 3-unit, and $1,601,425 for 4-unit properties in standard-cost counties for 2026 (verify the exact published figures in FHFA's 2026 county table). A borrower who buys a duplex, lives in one unit, and rents the other can borrow up to $1,032,650 at conforming rates — with rental income often offsetting much of the mortgage payment, owner-occupied multifamily is a viable path to homeownership with built-in income. FHA loan limits follow a parallel HERA formula, so the annual conforming limit increase triggers automatic FHA increases, expanding FHA-eligible properties at the same time. VA loans for eligible veterans with full entitlement operate differently: there is no loan limit — a veteran can finance any amount without crossing into jumbo territory, with no down payment required, no PMI, and no jumbo rate premium (though a funding fee applies). For veterans in high-cost areas purchasing above $1,249,125, this distinction is decisive.
How It Affects You
If your mortgage is under $832,750 in a standard-cost county: You qualify for conforming rates — typically 0.25–0.5 percentage points lower than jumbo rates on comparable loans. On a $750,000 loan, a 0.375% rate advantage (say 6.625% vs. 7.0%) saves roughly $160/month — about $1,920/year and nearly $58,000 over 30 years in lower interest, before any prepayment or refinancing. Conforming loans also have lower down payment requirements (as little as 3% for first-time buyers through Fannie's HomeReady or Freddie's Home Possible programs) and broader lender competition, which puts more rate pressure in your favor versus the smaller jumbo market where fewer lenders compete aggressively on price.
If you're buying in a high-cost market: Before assuming you need a jumbo loan, look up your county's specific 2026 limit at FHFA's county-by-county table: fhfa.gov/data/conforming-loan-limits. The limit in San Francisco, LA, NYC metro, DC metro, and similar counties is $1,249,125 — meaning a $1,100,000 mortgage is fully conforming and gets conforming rates. FHFA's table is searchable by state and county and also shows limits for 2-4 unit properties (significantly higher). Your loan officer should know your county's limit, but verify it yourself — errors in quoting limits have caused borrowers to overpay for jumbo products unnecessarily.
If your loan amount is slightly above the conforming limit: Three strategies can bring you back under the threshold. First, a larger down payment — if you're at $825,000 and the limit is $832,750, coming up with another $18,500 to close the gap can be worth it in long-term interest savings. Second, a piggyback loan — structure the first mortgage at exactly $832,750 (conforming) and take a second mortgage or HELOC for the remaining $18,500. Third, wait for FHFA's annual November announcement — the baseline has risen every year since 2016, and next year's limit typically exceeds the current one by several percent. A loan that's $20,000 over the 2026 limit may be fully conforming under the 2027 limit if you close in January. Talk to your lender about timing your closing to align with the new limits.
If you have an existing jumbo mortgage whose balance has dropped: If you took a jumbo loan several years ago when the limits were lower, check whether your current balance now falls below $832,750. Refinancing from a jumbo to a conforming loan can lower your rate even if current market rates are similar to your existing rate — because you're shifting from the jumbo pricing tier to the better-priced conforming tier. Factor in refinancing closing costs (typically 1-2% of the loan balance, or $8,000-$16,000 on an $800,000 loan) and calculate your break-even period: if the rate savings exceed the closing cost outlay within 3-5 years, refinancing is likely worth it.
State Variations
Conforming loan limits are set at the county level, not the state level. High-cost counties exist in many states:
- CA: Most coastal counties at $1,249,125; inland counties may be at baseline
- NY: NYC metro counties at ceiling; upstate at baseline
- CO: Denver metro at $816,500+; rural counties at baseline
- DC/VA/MD: Most metro counties at ceiling
- HI: Entire state at ceiling
Pending Legislation
- GSE reform: Proposals to reform or privatize Fannie Mae and Freddie Mac could fundamentally change how conforming limits are set and what loans the GSEs purchase.
- Limit increases: Some proposals would raise limits above the FHFA formula to expand access in high-cost areas.
Recent Developments
- FHFA raised the baseline limit to $806,500 for 2025 and $832,750 for 2026: The annual FHFA conforming loan limit adjustment — pegged to the House Price Index — has increased the baseline from $548,250 in 2021 to $806,500 in 2025 and $832,750 for 2026 (announced November 2025; +3.26% reflecting Q3 2024–Q3 2025 home price appreciation). In high-cost counties, the ceiling (150% of baseline) reached $1,249,125 for 2026; Alaska/Hawaii/Guam/USVI baseline is $1,249,125 with a $1,873,675 ceiling. These increases reflect the persistent house price appreciation of the 2020-2024 period and mean more mortgages can be originated as conforming loans — a meaningful advantage for borrowers in markets where prices are in the $800,000–$1,200,000 range.
- High-rate environment reduced jumbo vs. conforming spread (2023–2025): In prior low-rate cycles, jumbo loans (above the conforming limit) often carried rates within 0.25% of conforming rates, making the distinction largely academic for creditworthy borrowers. In the 2023–2025 high-rate environment, the spread widened to 0.5–1.0% in some periods, making the conforming classification significantly more valuable. Borrowers who could structure their purchase price and down payment to stay at or below the conforming limit saved meaningful money. The annual limit increases allowed some borrowers who had been in jumbo territory to refinance to conforming terms.
- GSE conservatorship reform discussions revived (2025): The Trump administration entered 2025 with renewed interest in releasing Fannie Mae and Freddie Mac from federal conservatorship — a discussion that had been largely dormant since 2019. FHFA Director Bill Pulte, confirmed in 2025, signaled the administration would work toward a release framework. If the GSEs are released from conservatorship, the conforming loan limit framework could change significantly — private markets might set different limits, or Congress might codify the current FHFA structure. As of April 2026, no formal release plan had been announced, but the policy direction is being watched closely by the mortgage industry.
- FHA loan limits track conforming limits, broadening the practical impact: FHA loan limits are set at 65% of the conforming limit for standard areas and the same ceiling as conforming loans for high-cost counties. The annual FHFA conforming limit increase therefore triggers automatic FHA limit increases — expanding the universe of properties eligible for FHA financing (low down payment, more flexible credit standards) at the same time. Homebuyers in markets between the FHA floor and the conforming ceiling can choose between FHA (lower down payment, mortgage insurance required) and conventional conforming (20% down avoids PMI; or lower down payment with PMI) financing structures.