Bigger Loans, Bigger Opportunities: Higher Conforming Loan Limits Are Here Early
Each November, the Federal Housing Finance Agency (FHFA) updates the maximum national baseline conforming loan limits for mortgages eligible for purchase by Fannie Mae and Freddie Mac for the following year. FHFA’s conforming loan limit is adjusted annually based on the percentage change in U.S. home prices, as measured by FHFA’s House Price Index (HPI). Specifically, FHFA will use the year-over-year change from the third quarter of 2025 to the third quarter of 2026 to adjust the maximum limit.
As a result, lenders can conservatively estimate the new maximum before it is announced in November and can begin offering conforming loans that will be eligible for purchase by Fannie and Freddie in the New Year once the new conforming loan limit takes effect.
So, although the FHFA has yet to announce the official 2027 conforming loan limit, many lenders proactively increase their conforming loan limits in anticipation of the official FHFA announcement.
The current 2026 national baseline limit for a one-unit property is $832,750, up $26,250 from 2025. Many lenders are now offering conforming loans up to $845,000, a $12,250 increase over this year. Other experts predict the FHFA’s new limit will be closer to $850,000.
So, why is this conforming loan limit important to prospective buyers?
Once a loan exceeds the applicable conforming limit, it generally moves into the “high-balance conforming” or “jumbo” loan market. Jumbo loans tend to have higher interest rates to account for the increased risk associated with a larger loan. Additionally, conforming loans allow as little as 3% down for first-time homebuyers and 5% down for others, and the underwriting process is uniform and predictable. These distinctions can be particularly important in the DMV, where high home prices can make it easy for a mortgage to cross the conforming-loan threshold.
For example, under the anticipatory limit of $845,000, a qualified buyer purchasing a $900,000 home with 5% down would have an $855,000 loan, just above the new threshold. However, if that buyer could add an additional $10,000 to their down payment, the loan would fall within the $845,000 conforming limit, which would likely result in a better interest rate.
The higher limit can therefore give borrowers more room to structure a purchase within the conforming financing market, thus improving affordability.
If you are buying or refinancing in the DMV and your loan amount is close to the conforming limit, it is worth having your financing reviewed now. Don’t hesitate to reach out to us! A loan that might previously have required jumbo financing could potentially fit within the higher conventional limits being offered today.
