What You Need to Know About the Conforming Loan Limit Increase for 2024
In November of 2023, the Federal Housing Finance Agency (FHFA) announced the conforming loan limit values (CLLs) for Fannie Mae and Freddie Mac will increase from $726,200 to $766,550 in 2024. This is an increase of $40,350 and will impact one-unit properties in most of the United States.
What is the Conforming Loan Limit?
The conforming loan limit is the maximum loan amount for one-unit properties that can be guaranteed and purchased by Fannie Mae and Freddie Mac. A loan amount higher than the conforming loan limit is considered a jumbo loan.
How is the Conforming Limit Determined?
The Housing and Economic Recovery Act of 2008 (HERA) requires that the conforming loan limit be adjusted each year to reflect the change in the national average U.S. home price. According to FHFA, home prices increased 5.56% on average between the third quarters of 2022 and 2023, so the conforming loan limit will increase by the same percentage.
What Does this Mean for Transferees?
This is good news for organizations with U.S. transferees or assignees who are hoping to purchase a home in the United States. An increase in the conforming loan limit means employees can borrow an additional $40,350 without requiring a jumbo loan, which is typically more difficult to qualify for and requires more documentation than a conforming loan.
How Does This Impact High-Cost Areas?
A high-cost area is a location in which 115% of the local median home value exceeds the conforming loan limit. In these high-cost areas, the conforming loan limit can go up to a ceiling of $1,149,825 (150% of $766,550).
In any given year, there are roughly 150-200 counties in the U.S. that are considered high-cost areas, and many employers need to entice employees to relocate to these locations. Some examples include areas in the vicinity of New York City, the San Francisco Bay Area, as well as Washington D.C. and surrounding counties. The increase of the conforming loan limit may put these areas within reach for some employees through easier-to-obtain financing.
Whatever the financing needs of your transferees may be, Sirva Mortgage is here to help. With over 30 years of focus and expertise in relocation mortgage lending, we understand the important role home financing plays in the relocation process. Please visit our mortgage website to learn more or contact us at MortgageClientServices@sirva.com.
Contributor: Linda Laramy, Director Client Services, SIRVA Mortgage