2 Million U.S. Homes Eligible Under New GSE Conforming Loan Limits

Zillow Home Loans, Seattle, said recently announced new conforming limits for loans eligible to be sold to Fannie Mae and Freddie Mac mean nearly two million U.S. homes no longer require jumbo loans.

Nicole Bachaud, Zillow Home Loans senior economist, said this means customers will have additional available inventory that is covered by a more accessible financing option, as jumbo loans often come with additional fees and more stringent qualification standards, making them less affordable for most buyers.

The Federal Housing Finance Agency in late November increased the conforming loan requirement by $79,000 —from $647,200 in 2022 to a baseline of $726,200 in 2023. In the most expensive parts of the county (103 counties), the conforming loan limit was raised to $1,089,300, topping the $1 million mark for the first time. These counties are largely concentrated in the nation’s most expensive metro areas, along the coasts and in the Mountain West.

Compared to conforming loans, jumbo loans typically require a higher credit score — 700 is the minimum score that many lenders accept for a jumbo loan, versus the score of 620 that many require for a conforming loan. Bigger down payments are also the norm with a jumbo loan: Jumbo loans often require 20% down, although some call for even higher down payments. Some jumbo loans also will require proof of larger cash reserves than conventional loans (up to 12 months’ worth).

“The addition of 2 million homes that now qualify for conforming loan options across the county is welcome news for home buyers entering a shopping season with fewer homes on the market,” Bachaud said. “Home price appreciation has slowed significantly, and this means that homes nearing jumbo loan territory will stay eligible for conforming loans longer than we have seen in the last few years.”