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Conforming home loan limits are tied to local home prices. Each year the Federal Housing Finance Agency (FHFA) evaluates home values nationwide and adjusts the conforming loan limits for each state and each county within each state. FHFA also establishes higher conforming loan limits for areas deemed to be “high cost areas” based on local median home values. In the King/Snohomish/Pierce county region, considered a high cost area, the conforming loan limit for 2023 is $977,500. Any loan above this amount is considered a jumbo loan. (In most of the United States the average 2023 conforming home loan limit is $726,200.)
What this year’s adjustment to the conforming loan limit means is more buyers can qualify for a conforming loan vs. a jumbo loan – good news if you’re planning to purchase a home this year. Conforming loans allow lower down payments (as low as 3%) and have more flexible loan qualification standards. Jumbo loans typically require a minimum 20% down payment, higher credit score and stricter loan qualification guidelines.
If you’re planning to purchase a home this year, meet with your lender or mortgage broker before you begin your home search. Find out what’s needed to start the loan application process and learn which loan program will best meet your needs and budget. Obtaining a fully underwritten loan approval before you begin your home search will put you in a much stronger position when you find the home that best meets your needs.
