Good News for Home Buyers and Home Builders: FHA and GSE Loan Limits Rise in 2024
Good News for Home Buyers and Home Builders: FHA and GSE Loan Limits Rise in 2024
The US government programs designed to boost homeownership just made buying a home more accessible.
Approximately 72% of home buyers use financing provided by the FHA, VA, Fannie Mae, or Freddie Mac—government agencies that require minimum or no down payment and offer friendlier borrowing terms than other mortgage programs:
- FHA financing is now available on homes up to $498,257 everywhere and up to $1,149,825 in the most expensive markets. Previously, the limits were $472,030 and $1,089,300.
- GSE (Fannie Mae and Freddie Mac) financing is now available on homes up to $766,550 everywhere and up to $1,149,825 in the most expensive markets. Previously, the limits were $726,200 and $1,089,000.
Many new homes are priced for mortgages just under the current limits. We expect many of these homes to increase in price now that favorable financing limits have increased.
Why bigger loans help
Here’s a refresher on FHA and GSE loans and who benefits from them:
- FHA loans go primarily to entry-level buyers with low down payments and/or lower credit scores, many of whom will qualify for a higher balance mortgage in 2024 than they could have in 2023.
- GSE loans go primarily to entry-level and move-up buyers with a higher credit score, who otherwise would have had to qualify for a jumbo loan.
The 2024 loan limit increases vary by MSA, ranging from no increase for select markets to a $63K loan limit increase. Several top markets have sizeable increases, and we expect these increased loan limits to positively impact next year’s new home sales (starting with home sales contracts now) and home closings.
Loan limits are indexed against home price appreciation from the prior year, which is why a few markets with no price appreciation (e.g., Austin) did not have any increase in loan limits. The government typically does not lower the limit when the market corrects. See the tables below for 2024 loan limits across the top housing markets we track.
