Loan Limits

Each year, the Federal Housing Finance Agency releases new loan limits for conforming loans that they base on the third quarter House Price Index report. In anticipation of official limits typically released in late November, The lending mamba is announcing increased limits for conventional loans through Fannie Mae and Freddie Mac.

While updated FHA and VA loan limits won’t be in effect until after the new year, if you’re getting a conventional loan from Fannie Mae and Freddie Mac, you can take advantage of increased buying power now. We’ll go over what the new limits are and what this means for home buyers or those looking to refinance.

VA Loan Limits

Under normal circumstances, VA loans don’t have loan limits. In the event that you default on the loan, the VA insures the same percentage of the mortgage for lenders regardless of the loan amount.

However, there are a couple of instances where VA loan limits do come into play. Where that’s the case, the limits listed above apply.

You might have a loan limit if you have what’s called impacted entitlement. In this case, part of your veteran benefit from the VA is shown as used up. You may have this if you have a VA loan that hasn’t been fully paid back or if you had a foreclosure that you haven’t paid the VA back for, for example.

If lenders think that a loan is large enough that it presents a slightly higher risk, they may also have different qualification requirements. While there’s no specific loan amount at which these  jumbo loans start, many lenders including The Lending Mamba use anything above conforming loan limits in the area as a guide. At The Lending Mamba you can get a VA jumbo loan for up to $2 million if you qualify.

FHA Loan Limits

FHA loan limits are updated at the beginning of each calendar year and effective January 1. Below we’ve listed the minimum and maximum loan amounts on a national level for residential properties with up to 4 units.

Before looking at these, it’s important to note how the limits on FHA mortgages work. The absolute lowest your own loan limit can be is 65% of the national conforming loan limit, which for a 1-unit property in 2023 is $472,030. However, loan limits are set entirely at the county level, so in many areas it’s going to be higher. Alaska and Hawaii fall at the national ceiling, which for 1-unit properties is $1,089,300.

Why Loan Limits Matter

The conforming loan limit in your area is important because amounts above conforming loan limits represent jumbo loans. While a jumbo smart loan from The Lending Mamba has several benefits as compared to the jumbo loan options offered by other lenders, including a lower down payment requirement and no required mortgage insurance, you’ll still have to meet stricter qualification standards than you would on a conforming loan.

Additionally, you may be able to get a lower rate on a conforming loan than you could on a jumbo loan because investors may be looking to be compensated for the increased risk of a bigger loan amount. It should be noted that this isn’t always the case and it depends heavily on investor appetite in the market at any given moment.

The Bottom Line

Loan limits that have generally gone up across the country mean that people should be able to afford more homes without having to deal with the additional qualification requirements necessary to get a jumbo loan. With loan limits up more than 10% for a conventional loan, this represents a major increase in your purchasing power.