Overview
Every year the Federal Housing Finance Agency (FHFA) determines the maximum conforming loan limits based on a variety of different housing metrics These limits are based on the year-over-year percentage change in the FHFA House Price Index (HPI). Quarter 3 data of the HPI is used when determining the increase. These loan limits generally increase year over year but occasionally remain unchanged. The past few years have seen some of the largest annual increases on record and that trend continues with 2023.
Why This Limit Matters
A significant increase in conforming loan limits will dramatically increase what borrowers can qualify for. This especially benefits many of the lower-cost counties – such as Riverside, Sacramento, and San Bernardino – as borrowers will be able to apply for conforming mortgages instead of jumbo mortgages which are harder to qualify for.
Conforming mortgages have some of the most lenient qualifying guidelines and some of the most attractive interest rates across the board. Lenders are keen to offer these conforming loans as they are easily purchased by Fannie Mae and Freddie Mac on the secondary mortgage market. This allows mortgage companies to continually originate new loans.
The New 2023 Limits
*Note that the conforming loan limit varies by two key factors:
1) Property Location by County
2) Number of Units
Below are the base figures for 2023:
1 Unit: $726,200
2 Unit: $929,850
3 Unit: $1,123,900
4 Unit: $1,396,800
Below are the 1 Unit figures for each county in California above the base limit:
Alameda: $1,089,300
Contra Costa: $1,089,300
Los Angeles: $1,089,300
Marin: $1,089,300
Orange: $1,089,300
San Benito: $1,089,300
San Francisco: $1,089,300
San Mateo: $1,089,300
Santa Clara: $1,089,300
Santa Cruz: $1,089,300
Napa: $1,017,750
San Diego: $977,500
Ventura: $948,750
Monterey: $915,400
San Luis Obispo: $911,950
Sonoma: $861,350
Santa Barbara: $805,000
El Dorado: $763,600
Placer: $763,600
Sacramento: $763,600
Yolo: $763,600
Conclusion
Higher conforming loan limits are a major benefit to borrowers. The higher limits can help offset the rising cost of homeownership by making the loan itself much more affordable. If you are looking to take advantage of these increases or are interested in learning more give us a call at (760) 930-0569.
