The Freddie Mac loan limit, also called the conforming loan limit, represents the maximum mortgage amount Freddie Mac will purchase from lenders. It is established yearly by the Federal Housing Finance Agency (FHFA) to reflect changes in home prices nationwide.
Mortgages within this limit are classified as conforming loans and typically benefit from lower interest rates, smaller down payment requirements, and streamlined approval processes because they can be sold easily to Freddie Mac. Loans exceeding this limit are known as jumbo loans and usually require stricter lending standards, higher credit scores, and larger down payments.
Think of the loan limit as a “standard box” size for mortgages: lenders can sell loans that fit within this box to Freddie Mac, freeing up capital to make more loans. Loans that exceed the limit do not fit the box and must be held by the lender, meaning more risk.
For 2024, the FHFA has set the baseline conforming loan limit at $766,550 for a single-family home, with higher limits in high-cost areas reaching up to $1,149,825. Limits increase for multi-unit properties, such as duplexes and four-unit buildings. Additionally, Alaska, Hawaii, Guam, and U.S. territories have separate higher limits due to market conditions.
Understanding these limits is crucial because conforming loans typically have more favorable terms, while jumbo loans, which surpass these limits, involve more stringent qualification requirements. Freddie Mac’s loan limits help maintain housing market stability by focusing financial support on typical homebuyers rather than exclusively on luxury properties.
For specific county limits, the FHFA provides an interactive map tool on their website where homebuyers and lenders can check local conforming loan limits.
The loan limits set by the FHFA apply equally to Freddie Mac and its counterpart Fannie Mae, as both operate under the same regulations in the secondary mortgage market. These entities buy loans from lenders to replenish their funds, promoting liquidity and affordability in the housing market.
For more information on jumbo loans and conforming loans, see our related articles Jumbo Loan and Conventional Mortgage.
Sources:
- Federal Housing Finance Agency, Conforming Loan Limits for 2024 (https://www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx)
- Freddie Mac, Understanding Conforming Loans (https://www.freddiemac.com/loan-limits)
- Consumer Financial Protection Bureau: What is a Conforming Loan? (https://www.consumerfinance.gov/ask-cfpb/what-is-a-conforming-loan-en-2021/)
