by, Laura Grace Tarpley, CEPF and Molly Grace
Nov 29, 2022
In 2023, you'll be able to borrow up to $726,200 for a conforming loan. The ceiling limit for high-cost areas will be $1,089,300.
In 2022, you can borrow up to $647,200 with a conforming loan in most parts of the US.
To borrow more than the FHFA allows for conforming loans, consider applying for a jumbo loan.
Each year, the Federal Housing Finance Agency (FHFA) adjusts the amount you can borrow with a conforming loan, which is probably what you think of as a "regular mortgage."
In most areas, if the loan amount you need for a home exceeds the conforming loan limit, you'll need to get a jumbo loan. However, in high-cost areas, you'll have a higher loan limit. This higher loan limit is based on the area's median home values, and may go up to the maximum "ceiling" limit, which is equal to 150% of the baseline limit.
What are the conforming loan limits for 2023?
The conforming loan limit for 2023 is $726,200 in most parts of the US, a $79,000 increase from the previous year's baseline limit.
In high-cost areas, conforming loan limits may go up to a maximum of $1,089,300. This is the first time the conforming loan limit ceiling has risen above $1 million. If you live in a high-cost area, you can use the county-by-county guide on the FHFA website to see what the limit is in your city.
In Alaska, Hawaii, Guam, and the US Virgin Islands, the baseline conforming loan limit is $1,089,300.
These are the borrowing limits for single-unit homes, but you can borrow more for two-unit, three-unit, and four-unit homes.
What are the conforming loan limits for 2022?
In 2022, the borrowing limit for a single-unit home in most parts of the US is $647,200. In more expensive parts of the country, the limit goes up to a max of $970,800.
These limits have gone up since 2021. The single-unit borrowing limit in 2021 was $548,250 in most parts of the country and $822,375 in high-cost areas.
What to do if you don't qualify for a conforming loan
If you want to borrow more than the FHFA allows in 2022, a jumbo loan may be an option. Jumbo loans are simply mortgages for people who need more than the FHFA normally allows. They typically have stricter eligibility requirementsand higher interest rates than conforming loans. Jumbo loans are riskier for lenders, so companies make it harder to qualify to decrease the likelihood of a borrower defaulting on payments.
Each lender has its own requirements for jumbo loans, but you'll probably need a higher credit score, lower debt-to-income ratio, and bigger down payment than you would for a conforming loan. Expect to need at least a 700 credit score and 20% or more for a down payment. You also may need a debt-to-income (DTI) ratio of 36% to 45%.
The better your credit score, DTI ratio, and down payment, the more you may be approved to borrow with a jumbo loan.
What if your credit and debt profiles aren't strong enough for a conforming or jumbo loan? You may want to apply for an FHA mortgage, which is for people with credit scores as low as 580 and a DTI ratio of 43% or lower. The borrowing limit depends on where you live, and you can find the limit for your county here.
You may qualify for a VA mortgage if you're a military member, or a USDA mortgage if you're buying in a rural area. Neither of these types of home loans requires a down payment. VA mortgages do not have a borrowing limit, and USDA mortgages usually have the same limits as conforming loans.
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