New home loan limits have been announced! What does this mean? Why does this matter?

The new high-balance loan limit (the highest you can borrow before your loan turns into a jumbo loan) is $1,149,825. For the first time in history, this number is higher than $1,000,000.

The baseline conforming loan limit increased by 5.5% for 2024.

2023 was $726,200.

2024 will be $766,550.

“Home prices increased 5.56% on average between the third quarters of 2022 and 2023. This is why the baseline conforming loan limit is going up in 2024 by the same percentage,” the FHFA said in a statement.

Firstly, this doesn’t help make more payments more affordable or lower anyone’s potential mortgage payment. 🫠 This is a question I get a lot! You're essentially allowed to borrow more money. A bigger loan means a bigger mortgage payment. It's just how the math, maths!

Secondly, there are 2 main buckets of money for the majority of first-time homebuyers. 💰

1. Conforming money

2. Jumbo money

Any loan above this new high balance limit will be a jumbo loan, which come from private investor funds. 💸 They take a deeper dive into who you are as a borrower 🔎 (trade line credit requirements, reserve requirements, bigger down payment required, etc.) compared to conforming loans.

Conforming loans “conform” to a set of standards set by lending laws making it easier for people to get this type of loan if they fit within certain parameters (97% LTV, max DTI of 50%, etc.) ✔️✔️✔️

Raising this allowed amount of money for conforming loans makes it an easier loan process & makes this money more accessible for first-time homebuyers, given that home prices have steadily risen. 🏡