The Federal Housing Finance Agency – the folks who oversee Fannie Mae and Freddie Mac (the agencies) – announced today that the nationwide 2023 conforming loan limit would be raised to $726,200. This means that the maximum loan amount on mortgages which are made and underwritten in such a way that they can be sold to the agencies has increased from $647,200 to the new limit.
Because the principal of the investments in pools of mortgages backed by the agencies are explicitly guaranteed, investors are willing to take a lower yield on these investments than on mortgage pools that are not guaranteed. This lower yield is then passed on to you, the homeowner, in the form of lower interest rates than most other types of loans.
Deeper Dive: Why should you care?
FHA and VA Loan Limits
FHA and VA loans typically carry even lower rates, but require large up-front funding fees or mortgage insurance premiums. FHA loans have monthly mortgage insurance premiums as well, so they are only less expensive overall in certain cases.
FHA loan limits tend to be aligned with conforming limits, so expect an announcement from HUD (the parent agency of FHA) in the near future. VA loans are currently not limited in the loan amount that the VA will guarantee, although each lender will have their own guidelines on this.
2023 Conforming Loan Limits in High-Cost Areas
The nationwide loan limit might not be that helpful in high-cost areas, so since 2010 there has been a second tier of conforming loans, called high-balance conforming loans. Areas like the San Francisco Bay Area, where I practice, qualify for this larger loan amount. The 2023 High-Balance Conforming Loan Amount was raised from $970,800 to $1,,089,300. This is the first time in history that Fannie Mae or Freddie Mac have agreed to purchase loans over $1 million on single-family residences.
Loan amounts are larger on multi-family properties. The agencies purchase conforming loans on properties with 1 to 4 units.
If you’d like more information regarding 2023 conforming loan limit for your county or for multi-family properties, or if you’d like to know what the current interest rates would be for your loan, please contact me through a contact form or through the contact information at the bottom of this page.
Casey Fleming, Mortgage Advisor and Author of The Loan Guide: How to Get the Best Possible Mortgage
About Casey Fleming: Casey Fleming is a veteran mortgage advisor (NMLS 344375) and Author of The Loan Guide: How to Get the Best Possible Mortgage. Casey advises clients throughout California, and is based in the heart of Silicon Valley. He writes articles regularly for several online publications, is a subject-matter expert for two prominent finance-related sites, and is regularly quoted in articles for many other publications.
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