Conventional Loan Limits 2025: What You Need to Know Before You Shop

Every year, the Federal Housing Finance Agency (FHFA) announces new conforming loan limits for conventional mortgages. These limits determine the maximum amount you can borrow with a standard conventional loan before you cross into jumbo loan territory.

For 2025, the baseline conforming loan limit is $806,500 for single-family homes in most of the U.S.—up from $766,550 in 2024. But if you’re buying in a high-cost area, your limit could be significantly higher.

Let’s break down what these limits mean for you and how they affect your home buying strategy.

What’s a Conforming Loan?

A conforming loan is a conventional mortgage that meets the guidelines set by Fannie Mae and Freddie Mac, including staying within the loan limits they establish.

Why does this matter? Because conforming loans are easier to qualify for, have better rates, and offer more flexible down payment options than jumbo loans.

If your loan amount exceeds the conforming limit for your county, you’ll need a jumbo loan, which typically requires:

• Higher credit scores (usually 700-720 minimum)
• Larger down payments (often 10-20%+)
• Lower debt-to-income ratios
• More cash reserves (6-12 months of payments)
• Higher interest rates

So knowing your local loan limit before you start shopping helps you set realistic price targets and avoid surprises.

Baseline Limits vs. High-Cost Areas

The baseline limit of $806,500 applies to most counties in the U.S. But in high-cost areas—places where home prices significantly exceed the national average—the limit can go much higher.

High-cost area limits are calculated as a percentage of the baseline limit, with a cap of $1,209,750 for single-family homes in 2025 (150% of the baseline).

Counties that qualify as high-cost include parts of:

• California (Los Angeles, San Francisco, San Diego, Orange County)
• New York (NYC boroughs, Westchester County)
• Massachusetts (Boston area)
• Colorado (Denver, Boulder)
• Washington (Seattle area)
• Hawaii (Honolulu)

If you’re buying in one of these areas, you can borrow significantly more while still getting conforming loan benefits. Check the FHFA county loan limit lookup tool to see your specific county’s limit.

Multi-Unit Properties Have Higher Limits

The loan limits increase if you’re buying a multi-unit property (duplex, triplex, or fourplex):

Baseline limits for 2025:

• Single-family: $806,500
• 2-unit: $1,032,975
• 3-unit: $1,248,575
• 4-unit: $1,551,300

High-cost area caps:

• Single-family: $1,209,750
• 2-unit: $1,549,450
• 3-unit: $1,872,850
• 4-unit: $2,326,950

If you’re considering a house hack strategy (buying a multi-unit property, living in one unit, and renting the others), these higher limits give you more purchasing power while still accessing conforming loan benefits.

What Happens When You Exceed the Limit?

Let’s say you’re buying in a baseline county and you want to purchase a $900,000 home. The conforming limit is $806,500, so you’re $93,500 over.

You have a few options:

Option 1: Jumbo Loan
Finance the full amount with a jumbo loan. You’ll face stricter requirements and slightly higher rates, but you can buy the home you want.

Option 2: Conforming + Second Mortgage
Finance $806,500 with a conforming first mortgage, then take a second mortgage or HELOC for the remaining $93,500. This keeps your primary loan conforming but adds complexity.

Option 3: Larger Down Payment
Put down enough cash to keep your loan amount under the conforming limit. In this example, you’d need to put down at least $93,500 + your original down payment.

Option 4: Buy a Less Expensive Home
Adjust your price range to stay within conforming limits. This might mean compromising on location, size, or condition, but it simplifies financing and saves money long-term.

Why Loan Limits Keep Rising

Loan limits are tied to home price appreciation. When median home prices increase nationally, the FHFA adjusts conforming limits to reflect that reality.

Over the past decade, limits have risen significantly:

• 2015: $417,000
• 2020: $510,400
• 2023: $726,200
• 2024: $766,550
• 2025: $806,500

This tracks with overall home price inflation. The goal is to keep conventional loans accessible to middle-class buyers in markets where home prices have risen faster than incomes.

But here’s the catch: just because the limit rises doesn’t mean affordability improves. If your income hasn’t kept pace with home prices, a higher loan limit doesn’t help much.

Strategic Implications for Buyers

Understanding loan limits helps you strategize before you shop.

If you’re close to the limit: Consider whether a slightly less expensive home keeps you in conforming territory and saves you thousands in interest over the loan term.

If you’re in a high-cost area: Take full advantage of the elevated limits. You might be able to afford more house than you think while still getting competitive conventional loan rates.

If you’re buying a multi-unit property: Factor in rental income from the other units. Lenders will count 75% of expected rental income toward your qualifying income, which can help you afford a more expensive property.

If you need a jumbo loan: Start preparing early. Build your credit to 740+, save a larger down payment, and accumulate cash reserves. Jumbo underwriting is more rigorous, but rates are often more competitive than people expect.

Regional Variations and Border Counties

Here’s something that surprises a lot of buyers: neighboring counties can have vastly different loan limits.

For example, in California, some inland counties have baseline limits ($806,500), while coastal counties have high-cost limits ($1,209,750). If you’re shopping near a county line, buying just a few miles away could unlock an extra $400,000 in conforming loan eligibility.

Same thing happens around major metros. Counties surrounding expensive cities often have elevated limits that give you more purchasing power without the full jumbo loan requirements.

Do your research. If you’re flexible on location, knowing the loan limits in surrounding counties could expand your options significantly.

Fixed vs. Adjustable Considerations

When you’re borrowing at or near the conforming limit, the type of loan matters.

30-year fixed is the default choice for most buyers. You lock in a rate for the entire term, which provides stability and predictability.

7/1 or 10/1 ARM offers a lower initial rate for the first 7-10 years, then adjusts annually based on an index. If you’re confident you’ll sell or refinance before the adjustment period, ARMs can save you thousands in the early years.

At higher loan amounts, even a 0.5% rate difference is significant. On an $800,000 loan, a 0.5% lower rate saves about $240/month—$2,880/year.

Just make sure you understand the risk. If you’re still in the home when the ARM adjusts and rates have climbed, your payment could increase substantially.

Refinancing and Loan Limits

Loan limits also matter when you refinance. If your original loan was conforming but your home has appreciated significantly, you might exceed the limit when doing a cash-out refinance.

For example, you bought a home for $700,000 with a $665,000 loan. Your home is now worth $950,000. You want to do a cash-out refi at 80% LTV, which would give you a $760,000 loan.

If you’re in a baseline county ($806,500 limit), you’re still conforming. But if you wanted to borrow more—say, $850,000—you’d cross into jumbo territory and face different terms.

Always check current loan limits before refinancing to make sure you’re not inadvertently triggering jumbo loan requirements.

Your Next Steps

Before you start house hunting, do these three things:

1. Look up your county’s loan limit using the FHFA tool
2. Calculate your maximum purchase price based on your down payment and the conforming limit
3. Talk to a loan officer about how close you are to the limit and whether staying under it makes sense

Conventional loan limits aren’t arbitrary—they directly affect your rates, terms, and qualification requirements. Understanding them before you shop gives you a strategic advantage and helps you avoid expensive mistakes.

Ready to explore your options with a licensed loan officer who understands conventional loan limits and can model different scenarios for you? Visit Browse Lenders to compare verified professionals and get transparent guidance tailored to your local market.