2025 Conforming Loan Limits: A Guide for Borrowers

New year, new loan limits.

Are you one of the 4.25 million Americans projected to buy a home in 2025? If so, you might need a solid understanding of the 2025 conforming loan limits!

And if the term “conforming loan limits” already has you drawing a blank, don’t worry. This concept can sound confusing, but it’s actually fairly straightforward.

The main thing you need to know is that understanding and working within the year’s conforming loan limits can help you find and finance your dream home. Loan limits play an important role in setting a budget, house hunting responsibly, and ultimately making a sound financial decision.

But we’re getting ahead of ourselves. Let’s start with a working definition, clarify this year’s numbers, and explore some potential alternative options.

Understanding Conforming Loans

Before you even get to conforming loan limits, you’ll need a solid understanding of conforming loans themselves.

A conforming loan is a type of conventional mortgage valued at or below the loan limits set by the Federal Housing Finance Agency (FHFA).

All conforming loans must also fit the funding criteria laid out by financial institutions Fannie Mae and Freddie Mac (large, government-backed companies that guarantee most mortgages).

The qualification process typically includes reviewing borrower aspects such as loan-to-value (LTV) ratio, debt-to-income (DTI) ratio, credit score, and more.

Understanding Loan Limits

So, what is a loan limit, then?

A loan limit refers to the dollar amount used as a ceiling when taking out a conforming loan. Think of it as the absolute maximum amount you could borrow to purchase a home with this loan type.

Remember: These limits are set by the FHFA. They announce the new limits every November, which go into effect the following January 1.

Limit amounts change every year. That’s because they’re directly tied to the average home price, which is almost always fluctuating.

Loan limits can also vary based on location. For example, in more expensive parts of the country, loan limits are typically higher. This is because you need more money to afford the same amount of house.

Understanding 2025 conforming loan limits is critical. It can help you gain a clear picture for how much you might be able to borrow, help keep your expectations in check, and maybe even clarify how close you might be to homeownership.

Clarifying 2025 Conforming Loan Limits

In late November 2024, the FHFA set and released 2025’s conforming loan limits.

This year, the limit for one-unit properties is $806,500 for most of the U.S. That’s an increase of $39,950 from 2024’s limit.

Areas with higher costs of living, like New York City and San Francisco, are held to a loan limit of $1,209,750. This figure is 150% of $806,500, the standard loan limit for much of the rest of the country.

To determine if you live in a qualifying high cost of living area, you can always consult a home finance expert. Otherwise, to avoid potential heartbreak, you shouldn’t necessarily count on the $1,209,750 loan limit!

It’s important to note that there are also special statutory provisions for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, where the loan limit is also $1,209,750 for 2025.

Need to Borrow More? You Have a Few Options

Of course, a conforming loan isn’t always right for everyone. Some homebuyers might want (or need) to spend more than the 2025 conforming loan limits allow.

If this sounds like you, you might need to explore other loan types.

While an FHA, USDA, VA, or different conventional loan option could be a great alternative for home purchases at or below the loan limit, buyers specifically looking to borrow more should explore nonconforming or jumbo loans . These mortgage types are best for financing properties with prices exceeding typical loan limits.

But remember how conforming loans are guaranteed by Fannie Mae or Freddie Mac? Because jumbo loans are not conforming loans, they’re also not insured by either institution. That means they pose more risk for lenders, so these loan types might come with higher interest rates or stricter requirements.

If you’re not sure on the best path forward, you’ll definitely want to sit down with a home finance professional.