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When you get a mortgage, there’s a limit to how much you can borrow. On an individual level, this will be determined by how creditworthy you are and how much you can afford to spend each month.
At the industry level, lenders are limited by how much they can lend to borrowers if they want their loans to conform to the standards set forth by the Federal Housing Finance Agency (FHFA). Conventional loans that meet these standards are called conforming loans.
Our brokers know that Orion offers a variety of loan products and amounts, individually tailored to your client's needs. Brokers also know that the industry standard are loan amounts set by Fannie Mae and Freddie Mac.
The Federal Housing Finance Agency (FHFA) sets the conforming loan limits for Fannie Mae and Freddie Mac, the two government-sponsored enterprises it oversees.
These agencies purchase mortgages from lenders that meet their specific standards and bundle them into mortgage-backed securities for investors. This system provides lenders with the liquidity needed to offer homebuyers affordable mortgage loans.
In addition to loan limits, Fannie Mae and Freddie Mac have other requirements for the loans they buy, such as minimum credit scores, minimum down payments, and maximum debt-to-income ratios (DTI). However, when people refer to conforming loan standards, they are usually focusing on the loan limits themselves.
Loan limits determine the approval guidelines for mortgages within the loan limit range. “Conforming,” or “conventional,” mortgages are funded by lenders and sold to either Fannie Mae or Freddie Mac (the GSEs, or government sponsored enterprises), which then create mortgage-backed securities and sell them to investors. Lenders like Orion approve and fund conforming loans using guidelines established by either Fannie or Freddie (there are some slight variances). If a mortgage fits the guidelines, it can be purchased by the GSEs. Investors purchase MBS from either Fannie or Freddie know that their investment meets the criteria required by the issuing GSE. Loan limits are set to ensure the GSEs are facilitating financing for families that can benefit the most from lower down payment, lower interest rate mortgages.
The baseline conforming loan limit for 2025 is set at $806,500, an increase from $766,550 in 2024. In high-cost areas like Alaska and Hawaii, the limit for a single-unit property rises to $1,209,750.
If your desired home loan amount exceeds your county’s conforming loan limit, you will need to apply for a jumbo loan. Jumbo loans allow for higher borrowing limits but generally come with stricter qualification requirements, including higher credit scores and larger down payments.
Conforming loan limits vary across states and counties, reflecting local median home values and housing market conditions. Here are some examples of conforming loan limits for 2025 in various locations:
These examples illustrate how the Federal Housing Finance Agency adjusts loan limits to accommodate varying housing costs across different regions, ensuring more borrowers can access conforming loans with favorable terms.
Every year the loan limits are reviewed and adjusted according to the home values across the country. FHFA determines the loan limits with its House Price Index report which tracks the average increase in home values over the year and then adjusts the loan limit accordingly. Since the creation of the conforming mortgage products in 1980 (with an original limit of $93,750) until 2006 there had never been a year without an increase in the loan limit (save for a $150 decline in 1990). From 2006 to 2016, including the year Orion opened its doors in 2014, the limit remained at $417,000. In 2008, as a reaction to the severe decline in real estate sales and values, FHFA created the “high-balance” or “conforming jumbo” products for the GSEs, which have slightly stricter underwriting guidelines, higher loan limits, and higher costs/rates.
Conforming loan limits are directly linked to home prices. Each year, the Federal Housing Finance Agency (FHFA) updates the baseline conforming loan limit by analyzing its House Price Index (HPI) report, which measures the average change in home values over the previous year.
These loan limit values are recalculated annually using third-quarter data from the FHFA HPI. For 2025, the conforming loan limit increased by approximately 5.21%.
Conforming loans offer advantages to borrowers, including generally lower interest rates compared to non-conforming loan types.
If the price of the home you wish to buy exceeds your area's conforming loan limit, one strategy to qualify for a conforming loan is to increase your down payment, keeping your loan amount within the conforming limit and avoiding the need for a jumbo loan.
Limits are important because a family needing an Orion mortgage for $600,000 can obtain a conforming mortgage at a lower rate than a high-balance or jumbo mortgage at a higher rate. The family needing a mortgage for up to what is estimated to be $950,000 next year can now benefit from easier underwriting standards and possibly a lower rate from a high-balance conforming mortgage instead of a “jumbo” mortgage. Higher loan limits enable families to afford a higher priced home, or the same priced home with a smaller down payment.
Home prices can vary significantly from state to state and even between counties, making a single conforming loan limit across the entire country impractical. For example, comparing home prices in rural Ohio to those in Manhattan—a designated high-cost area and one of the most expensive real estate markets in the U.S.—illustrates this disparity. It's important to be careful what you read when considering published information on mortgage rates and lending practices.
Because of this, the Federal Housing Finance Agency (FHFA) sets higher maximum loan limits for designated high-cost areas. These applicable loan limit values are based on the local median home value relative to the baseline conforming loan limit.
The applicable loan limit can be up to 150% of the baseline conforming loan limit, depending on the local median home value. To find the current maximum loan limits in your county equivalent areas, you can use the FHFA’s interactive map.
For instance, if you are considering purchasing a $900,000 home in California, the conforming loan limit will vary by county.
In San Bernardino County, which is not classified as a designated high-cost area, the baseline conforming loan limit of $806,500 applies. Therefore, purchasing a home at $900,000 would require a jumbo loan.
Conversely, Los Angeles County, a designated high-cost area, has a maximum loan limit of $1,209,750 for one-unit properties. This means you could finance the $900,000 home with a conforming loan, avoiding the stricter requirements of jumbo loans.
In addition to being the ceiling for high-cost counties, these maximum loan limits also apply to one-unit properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands due to special statutory provisions.
If you’re considering purchasing a home beyond the established conforming loan limits, it’s crucial to fully understand the financial implications of obtaining a non-conforming loan. Non-conforming loans, often referred to as jumbo loans, typically involve larger loan amounts and consequently higher monthly mortgage payments, which can significantly impact your overall budget and affordability.
This consideration is particularly important in designated high-cost areas, where even with elevated conforming loan limit values, a substantial portion of the local housing inventory may still exceed the maximum loan limits. Understanding the local median home value and applicable loan limit for your county or county equivalent area is essential for effective financial planning.
What does taking out a jumbo loan mean for your financial health? The upfront costs can be substantially higher compared to conforming mortgages. While conforming loans often allow down payments as low as 3%, jumbo loan borrowers are generally required to make down payments exceeding 10%. Additionally, qualifying for a jumbo loan usually demands higher credit scores—typically in the 700s—and a debt-to-income (DTI) ratio of 45% or lower.
If you meet these stricter loan standards, a jumbo loan can provide the necessary financing for high-cost homes that exceed baseline loan limits. However, before proceeding, ensure you are familiar with the current conforming loan limit values and understand how conforming loans differ from non-conforming loans in terms of interest rates, down payment requirements, and lender underwriting criteria.
For borrowers planning to finance a home purchase with a mortgage and who have a substantial home buying budget, it is vital to be aware of the maximum conforming loan limits in your specific county or high-cost area. While jumbo loans and other non-conforming loan types provide flexibility to exceed these limits, doing so means foregoing the benefits associated with conforming mortgages, such as lower interest rates, reduced down payment requirements, and more favorable loan terms.
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