December 3, 2024
What Are the New Limits?
For 2025, the conforming loan limit is set at $806,500, a $39,950 (or 5.2%) increase from 2024’s limit of $766,500. This means buyers can finance homes up to this amount using conventional loans eligible for purchase by Fannie Mae and Freddie Mac.
Understanding Conforming Loan Limits
The conforming loan limit sets the maximum amount you can borrow on a mortgage that Fannie Mae and Freddie Mac can purchase. Mortgages exceeding this amount are classified as jumbo loans, which are typically held by private lenders rather than sold to government-sponsored enterprises.
How Are Conforming Loan Limits Determined?
What Happens If You Need to Borrow More?
If your dream home exceeds the $806,500 limit, you’ll need a jumbo loan. These loans provide access to higher borrowing amounts but come with additional requirements:
- Higher Credit Scores: Jumbo loans often require a credit score of 700 or higher, while conforming loans allow for scores as low as 620.
- Larger Down Payments: While conforming loans may require just 3% down, jumbo loans often require 10–20%.
- Stricter Income and Asset Verification: Lenders scrutinize financial qualifications more rigorously for jumbo loans.
What Does This Mean for Buyers in 2025?
The higher conforming loan limit gives buyers more flexibility to finance homes without moving into the jumbo loan category. This is especially beneficial in areas with high home prices, where staying under the conforming limit can make a significant difference in affordability.
Next Steps for Buyers
If you’re in the market for a home:
- Understand Your Budget: Use the new limits as a guide when determining how much you can borrow.
- Explore Loan Options: Compare conforming and jumbo loans to see which best fits your needs.
- Prepare Financially: Strengthen your credit and save for a down payment to ensure you meet your chosen loan’s qualifications.
Whether you’re buying your first home or upgrading to your dream property, the increased 2025 limits offer more options for financing your purchase. Ready to explore the possibilities? Let’s connect and discuss how these changes can help you achieve your homeownership goals.