New conforming loan limits for 2023 have been formalized by the Federal Housing Finance Agency (FHFA), with the cap for single-unit properties across most of the country set at $726,200.
The conforming loan limit is the maximum dollar amount of a mortgage that Fannie Mae or Freddie Mac will guarantee. In accordance with the Housing and Economic Recovery Act, the limit is adjusted annually to correspond with the average price of a home in the United States.
This adjustment is made on a per-county basis, with the limit in most counties receiving a bump equal to the average percentage increase of nationwide home prices. In third-quarter 2022, this increase was 12.21%, according to the FHFA’s House Price Index report.
Put another way, next year’s limit for most of the country is an increase of $79,000 from the $647,200 conforming loan limit in 2022 — no surprise given that home values have, until recently, been rising at a breakneck pace. In fact, due to ever-increasing home values, conforming loan limits will be higher in all but two U.S. counties or county equivalents.
In some counties, the cap will be even higher than the baseline limit. Applicable loan limits are higher in places designated by the FHFA as high-cost areas, or areas where 115% of the local median home value is greater than the baseline conforming loan limit. In these regions (which include New York City, Los Angeles, Washington, D.C., and parts of the San Francisco Bay Area, among others) next year’s ceiling for one-unit properties will be 150% of the baseline conforming loan limit: $1,089,300.
This figure also serves as the loan limit for Alaska, Hawaii, Guam and the U.S. Virgin Islands, each of which have loan limits established by special statutory provisions.