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2023 Loan Limit Increase

Exciting changes are coming that can affect how much you can borrow – in a good way. If you’re considering buying a home, 2023 may be the year for you. Marat looks at the 2023 loan limit increase and what it means for homebuyers.

What Are Conforming Loans?

As we break down the news on the 2023 loan limit increase, let's look at what kinds of loans the increase affects. What are conforming loans? These are loans that meet the guidelines Fannie Mae and Freddie Mac set for mortgages. Conforming loans have lower interest rates than other loans because lenders sell these loans to investors, thus increasing their returns from funding the loans.

If "selling loans to investors" sounds familiar, yes, these loans make up what is known as mortgage-backed securities. Following the 2008 recession, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. In part, these reforms limited how large a loan could be when included in these securities.

What Are Jumbo Loans?

Jumbo loans are loans for homes too expensive to conform to Fannie Mae and Freddie Mac's guidelines. Since Freddie Mac and Fannie Mae can't guarantee these loans, they're riskier for financial institutions to fund. This means more stringent underwriting requirements, additional steps in the lending process, and importantly, higher interest rates. It also means a higher FICO requirement compared to conforming loans.

How Do the Rising Loan Limits Impact You?

The increased loan limit means that you can borrow more (and buy a bigger house) while paying a lower interest rate than you would under the old limits. You see, if you need a larger loan than the limit allows, you must apply for a jumbo loan.

Jumbo loans are good because they allow people to make significant home purchases. However, the size of the loan means that you have more stringent underwriting requirements and often higher interest rates.

Raised Loan Limits Mean Savings for Homebuyers

With the loan limits rising, you can borrow more money for less money. Because your loan will once again conform with Fannie Mae and Freddie Mac's requirements. You can borrow with lower interest rates and a smoother process compared to jumbo loans.

Remember that loan limits are county-specific so check with your local lenders to see what you qualify for. While some counties may have lower than the $715k 2023 limit, others may be higher.

Are you looking for a mortgage loan? Can we help you or your clients reach their dream of home ownership? Go to to schedule an appointment and talk about your or your client's options.


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