Conventional Loan Limits

What is a Conventional Loan Limit?

In order to understand what a Conventional Loan Limit is it is important to realize a few of the key factors in deciding what is and what isn’t a Conventional Loan. In most fields a Conventional Loan is the same thing as a Conforming Loan, or a loan which falls under the ability of Freddie Mac or Fannie Mae to cover. The Federal Housing Finance Agency, more generally know by their acronym FHFA, decides annually the conforming loan limits for both Freddie Mac and Fannie Mae. These also include general loan limits and high cost area loan limits which can vary by geographical location.

An important feature of Conventional Loan Limits is also the readily open market for these loans to be lent. The reason for this is the government approved risk taken on by Freddie Mac and Fannie Mae benefits from greater liquidity than any loan that exceeds the annually set limit. This limit is usually set on a October-to-October changes in the median of housing prices, with anything exceeding the limit being referred to as a jumbo loan.

Currently the conforming limits have not changed since 2006, which is helps existing United States homeowners to refinance and keeps mortgage rates low when accessing these government backed loans. At the time this article was written or published the maximum amount a Conventional Loan was set for a single-family home was set for $417,000. It is worth mentioning that the Federal Housing Administration and the Department of Veteran Affairs have specific control over any loans falling under their jurisdiction.

The base line, non-high-cost conforming loan limits for 2015 are:

  • 1 family unit home: $417,000
  • 2 family unit home: $533,850
  • 3 family unit home: $645,300
  • 4 family unit home: $801,950

The rates for high cost areas are, as previously stated, higher and look something like this:

  • 1 family unit home (high cost): $625,000
  • 2 family unit home (high cost): $800,775
  • 3 family unit home (high cost): $967,950
  • 4 family unit home (high cost): $1,202,925

As with every loan rate there are exceptions for further high cost areas, and these numbers are simply averages.

Chart of Loan Limits for 2015

Chart of Loan Limits for 2015