Couple viewing a home for sale

Yes, your buyer can bid on that $1M home 

For the first time ever, the baseline conforming loan limit topped $1 million in high-cost areas, giving buyers more purchase options.

January 6, 2023
3 minutes

Key points:

  • For most of the country, the conforming loan limit is $726,200, up from $647,200 in 2022.
  • Buyers can borrow above the limit through a jumbo loan, but that usually comes with additional fees and stricter qualifying standards.
  • Zillow estimates the limit increase means more than two million homes across the country will no longer require a jumbo loan.

A big increase in the conforming loan limit is providing more flexibility for agents who work with buyers in high-priced areas.

For the first time ever, the baseline conforming loan limit topped $1 million in high-cost areas, which means that more than two million homes across the country no longer require a jumbo loan, according to a Zillow analysis.

Avoiding a jumbo loan can be important to buyers, as they can be harder to qualify for and often come with additional fees and larger down payments. The increased limit gives buyers more options in this sluggish market, particularly in areas where the homes for sale are often priced near jumbo loan territory, said Nicole Bachaud, a senior economist at Zillow.

"We have a way slower housing market than we saw a year ago," Bachaud said. "We're in a position now where buyers have more negotiating power. We're seeing homes sitting on the market longer… This can be a time where buyers can make things work if they are right on that line."

The Federal Housing Finance Agency announced the changes in November, and they went into effect in January. The conforming loan limit is now $1,089,300 in some high-cost markets. For the majority of the country, the conforming rate is $726,200 in 2023, an increase of $79,000 from last year.

The FHFA used its home price index to determine the new limits, noting that prices increased 12.2%, on average, between the third quarters of 2021 and 2022.

Bachaud said that for some buyers who wanted to avoid a jumbo loan, they'll now have access to more potential inventory, which could mean more opportunities for agents to help get them across the finish line. 

"Getting a mortgage in December and getting a mortgage in January can really make it or break it for buyers," Bachaud said. "This can certainly be a time to refresh that home buying search for agents and buyers."

The high-cost markets are generally concentrated on the West and East Coasts. Typical home values around San Francisco, New York City and coastal Massachusetts already bump up against (or exceed) the new limit in some areas. According to Zillow's analysis, nearly 85% of the homes in Nantucket County in Massachusetts, for example, would likely require a jumbo loan that starts at over $1 million. Other expensive regions that will benefit from the increased limit include resort towns in Wyoming and Colorado.

Across the country, particularly in the Midwest and the South, are many areas with home values well below the jumbo loan limit of $726,200, so the typical buyer in those regions will see little impact from the change.

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