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Posted 11/25/2015

2016 Mortgage Loan Limits For Conforming Loans Now Available

Conforming mortgage loan limits, 1980-2016

2016 Loan Limits: 11th Year At $417,000

2016 conforming loan limits are set at $417,000 for single-family homes nationwide, indicating no change in loan limits from the year prior

Mortgage loan limits have been set at $417,000 for 1-unit homes since 2006.

However, like last year, the Federal Housing Finance Agency (FHFA) added new metropolitan areas to its "high-cost" zones, giving buyers and residents of those areas access to extended loan limits which reach as high as $721,050.

Higher loan limits create home loan refinance opportunities for certain homeowners, and make it simpler for buyers to get access to conventional mortgage financing.

County-by-county, loan limits can vary.

This chart of loan limits in every U.S. county summarizes conventional mortgage loan limits for homes of 1-unit, 2-unit, 3-unit, and 4-unit; and, includes loan limits for FHA loans and VA loans in every U.S. county as well.

Current mortgage rates are unaffected by the news.

What Is A Mortgage Loan Limit?

Loan limits are appropriately named. They are the maximum allowable loan size for a mortgage. Loans for amounts above loan limits cannot be approved.

Mortgage loan limits can vary by product and by ZIP code.

For example, the Federal Housing Administration enforces a particular set of loan limits for its FHA loans which is different from how Fannie Mae and Freddie Mac do it; and, the Department of Veterans Affairs maintains its own specific limits (or, more accurately, no loan limits) for its VA loans.

For the FHFA, which "runs" Fannie Mae and Freddie Mac, there's a formula by which mortgage loan limits are assigning for a particular U.S. county

For 2016, the floor for all counties is $417,000 for single-unit homes. This is the default mortgage loan limit nationwide.

However, in specific counties where the cost of living is higher than typical, and the typical home sale price is well above the national average, the FHFA assigns 2016 conforming mortgage loan limits to be a little higher.

Loans exceeding the local conforming loan limits can still get approved, however. This is what a "jumbo loan" is.

A jumbo loan is a loan which is too large for Fannie Mae or Freddie Mac to guarantee. Jumbo loans are available via local and national banks. They're sometimes sent to Wall Street like conforming loans, but not always.

In general, it's more difficult to get approved for a jumbo loan as compared to a loan backed by the FHFA because of additional credit score requirements and more stringent income calculations.

Also, for jumbo loans, downpayment requirements are often larger.

This is why it's important that government granted "high-cost" status to an additional group of cities for 2016, raising the total to 234 areas nationwide.

With an increase in their 2016 mortgage loan limits, more of today's home buyers can use low-downpayment mortgage programs such as the Conventional 97 program, as well as the 80/10/10 piggyback loan.

Furthermore, refinance programs such as HARP 2 can remain within reach for the hundreds of thousands of eligible U.S. homeowners.

In some metropolitan areas, 2016 loan limits increased by as much as $34,500.

Click to see today's rates (May 30th, 2016)

Conforming Loan Limits For 2016

Fannie Mae and Freddie Mac have made no changes for 2016 to the conforming mortgage loan limit floor of $417,000. This is the same level at which the floor has been since 2006.

So, why hasn't the loan limit changed in 11 years? It's important to understand a little bit of history first.

In 2005, home values were rising quickly nationwide and Fannie Mae and Freddie Mac were "losing business". Private mortgage lenders were offering lower mortgage rates and easier approval terms to buyers.

Naturally, buyers went with the "best mortgage rate" and the best deal so, to capture extra market share, Fannie Mae and Freddie Mac raised the maximum loan size they were willing to back.

In 2006, mortgage loan limits were increased by more $57,000 as compared to the year prior. This was the largest 1-year increase in history by more than double the previous record.

It was clear that Fannie Mae and Freddie Mac wanted to re-capture market share they had collectively lost.

However, beginning in late-2006, the housing market began to soften and by the start of 2007, last decade's housing market downturn had commenced.

As home values dropped, private mortgage lenders left the market en masse. Fannie Mae and Freddie Mac became, almost literally, the last source of mortgage financing available.

The FHA existed, the VA was available, and there was Fannie Mae and Freddie Mac. Beyond that, there wasn't much -- especially for buyers with anything less than "perfect credit".

So, between 2007-2011, despite rapidly falling home values and a deteriorating market for credit, government held conforming loan limits exactly where they were.

This was a clear message to the markets.

In the past, the government had raised loan limits when home values climbed, and lowered loan limits when home values dropped. This wasn't going to be how the government supported housing going forward.

Officials defended their decision by saying that making mortgage credit available to U.S. home buyers was crucial to the housing market's recovery.

In hindsight, this has been proved correct, but by 2009, with the outcome still uncertain, the government decided to take its support for housing a step farther.

In 2009, the conforming loan limits were given an increase in specific "high-cost" areas nationwide; areas in which the median home sale price handily exceeded the national average.

This move slowed falling home prices, as expected, and the program remains in effect today.

As of 2016, there are 234 high-cost areas nationwide which includes New York City, New York; Los Angeles, California; and the entire San Francisco-San Jose-Oakland metropolitan region, among others.

The baseline, non-high-cost conforming loan limits for 2016 are :

  • 1-unit home : $417,000
  • 2-unit home : $533,850
  • 3-unit home : $645,300
  • 4-unit home : $801,950

High-cost conforming loan limits range up to $625,000 for a one-unit home; $800,775 for a two-unit home; $967,950 for a three-unit; and $1,202,925 for a four-unit.

In Hawaii, loan limits are even higher.

Click to see today's rates (May 30th, 2016)

39 U.S. Counties Granted 2016 Loan Limit Increases

There is no change in the 2016 conforming mortgage loan limit from the year prior, but 39 U.S. counties have been granted an increase in their local mortgage loan limit.

These are areas in which the median home sale price increased last year to a point where they exceed the national average handily.

These counties are considered "high-cost".

10 counties in Colorado (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park ) received a $34,500 increase in their local conforming loan limits -- the largest increase assigned to any U.S. county.

The conforming loan limit for these 10 Colorado counties is now $458,800.

The next largest conforming loan limit increase ($33,500) was granted to Sonoma County, California, where the local loan limit is now $554,300.

A handful of counties in Massachusetts and New Hampshire received a modest loan limit boost of $5,750. Each county is linked to Boston's expanding housing market.

A complete list of the U.S. counties receiving an increase to their local conforming loan limit, with a comparison against their prior-year limits, follows:

  • Monterey County, California 2016 Loan Limit: $529,000 (2015: $502,550)
  • Napa County, California 2016 Loan Limit: $625,500 (2015: $615,250)
  • San Diego County, California 2016 Loan Limit: $580,750 (2015: $562,350)
  • Sonoma County, California 2016 Loan Limit: $554,300 (2015: $520,950)
  • Adams County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Arapahoe County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Boulder County, Colorado 2016 Loan Limit: $474,950 (2015: $456,550)
  • Broomfield County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Clear Creek County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Denver County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Douglas County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Elbert County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Gilpin County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Jefferson County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Park County, Colorado 2016 Loan Limit: $458,850 (2015: $424,350)
  • Essex County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Middlesex County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Norfolk County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Plymouth County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Suffolk County, Massachusetts 2016 Loan Limit: $523,250 (2015: $517,500)
  • Rockingham County, New Hampshire 2016 Loan Limit: $523,250 (2015: $517,500)
  • Strafford County, New Hampshire 2016 Loan Limit: $523,250 (2015: $517,500)
  • Cannon County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Cheatham County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Davidson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Dickson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Hickman County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Macon County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Maury County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Robertson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Rutherford County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Smith County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Sumner County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Trousdale County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Williamson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • Wilson County, Tennessee 2016 Loan Limit: $437,000 (2015: $425,500)
  • King County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)
  • Pierce County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)
  • Snohomish County, Washington 2016 Loan Limit: $540,500 (2015: $517,500)

Note that these counties receiving an increase in 2016 conforming loan limits only. More than 200 U.S. counties remain high-cost eligible.

Verify your local limits before assuming that your loan won't qualify as conforming.

What Are Today's Mortgage Rates And Loan Limits

2015 conforming loan limits are unchanged from the year prior, baselined to $417,000 nationwide. Loan limits, however, will vary by state and county -- sometimes by a lot.

Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.

Click to see today's rates (May 30th, 2016)

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.

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2016 Conforming, FHA, & VA Loan Limits

Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)