FHFA, FHA Announce 2024 Loan Limits
Written By: Joel Palmer, Op-Ed Writer
Rising home prices this year have led to higher loan limits for 2024.
The Housing Finance Agency (FHFA) increased the conforming loan limit values (CLLs) for mortgages Fannie Mae and Freddie Mac will acquire in 2024. In most of the United States, the 2024 CLL value for one-unit properties will be $766,550, an increase of $40,350 from 2023.
The Housing and Economic Recovery Act (HERA) requires FHFA to adjust the CLL value each year to reflect the change in the average U.S. home price. According to the latest FHFA House Price Index, house prices increased 5.56 percent, on average, between the third quarters of 2022 and 2023. The baseline CLL will increase by the same percentage.
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, up to a maximum of 150 percent of the baseline limit. The new ceiling loan limit for one-unit properties will be $1,149,825, 150 percent of $766,550.
Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.
Due to rising home values, the CLL values will be higher in all but five U.S. counties or county equivalents.
Also last week, the Federal Housing Administration (FHA) announced new loan limits for 2024.
FHA is required to update its annual loan limits each year using a formula prescribed in the National Housing Act. This formula uses county or Metropolitan Statistical Area (MSA) home sale data to derive new loan limits for the three different cost categories established by the law.
Next year’s FHA loan limits will be:
One-unit: $498,257 in low-cost areas and $1,149,825 in high-cost areas
Two-unit: $637,950 in low-cost areas and $1,472,250 in high-cost areas
Three-unit: $771,125 in low-cost areas and $1,779,525 in high-cost areas
Four-unit: $958,350 in low-cost areas and $2,211,600 for high-cost areas.
As with the FHFA conforming loans, there are special exception areas for Alaska, Hawaii, Guam and the U.S. Virgin Islands.
FHA’s minimum national loan limit floor of $498,257 for a one-unit property is set at 65 percent of the national conforming loan limit. This floor applies to those areas where 115 percent of the median home price is less than the floor limit. Any area where the loan limit exceeds this floor is considered a high-cost area. In these areas, FHA establishes varying loan limits above the floor based upon the respective median home prices in each area.
The maximum loan limits for FHA forward mortgages will rise in 3,138 counties. In 96 counties, FHA’s loan limits will remain unchanged.
The HECM maximum claim amount will increase from $1,089,300 in 2023 to $1,149,825 in 2024. This maximum claim amount is applicable to all areas, including the special exception areas.
To find a complete list of FHA loan limits, areas at the FHA ceiling, and areas between the floor and the ceiling, visit FHA's Loan Limits Page.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
