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It looks like mortgage lenders will once again seek to get a jump on the annual increase in Fannie Mae and Freddie Mac’s conforming loan limit, with Rocket Mortgage announcing Friday that it’s now treating loans of up to $802,650 as conforming.
That’s 5.3 percent higher than the official 2024 conforming loan limit of $766,550 for single family homes set by Fannie and Freddie’s federal regulator, the Federal Housing Finance Agency (FHFA).
Because Fannie and Freddie can’t buy or guarantee mortgages exceeding the conforming loan limit, jumbo mortgages tend to have stricter underwriting and higher down payment requirements, and borrowers typically pay higher rates.
“The change gives more Americans access to conventional loans – which are far less restrictive and have much more approachable pricing than jumbo loans,” Rocket spokesperson Allison Leiser said in a statement. “New applications on Fannie or Freddie conventional products can exceed the 2024 loan limits, which could mean less money down, more cash out or even better pricing for clients who need loans above the 2024 maximum loan amount.”
Congress has mandated that the conforming loan limit be tied to annual increases in FHFA’s seasonally adjusted, expanded-data House Price Index. FHFA won’t announce the 2025 conforming loan limit until November, after it has calculated how much home prices went up during the year ending Sept. 30.
U.S. home prices rose 5.7 percent during the year ending June 30, FHFA reported on Aug. 27. So Rocket is not throwing caution to the wind — although Fannie Mae forecasters predict home price appreciation will slow to an annual rate 3 percent by Q4 2025, it’s expected to come in at 6.3 percent during Q3 2024 and 6.1 percent in Q4.
The rapid runup in home prices during the pandemic led many big lenders to make a practice of getting a jump on the FHFA’s official announcement of the following year’s conforming loan limit. Lenders are able to hold jumbo loans that they priced as conforming on their books and then sell them to Fannie and Freddie as conforming when the new limits take effect in the New Year.
Rocket Pro TPO, which makes loans through independent mortgage brokers, was the first to announce higher conforming loan limits this year. Last year Rocket, UWM and Rate all started treating loans of up to $750,000 as if they were conforming in October when the official limit was still $726,200. UWM and Rate (formerly Guaranteed Rate) did not immediately respond to Inman’s request for comment on whether they’ll follow Rocket’s lead this year.
Baseline conforming loan limit, 2000-2024
Source: Federal Housing Finance Agency.
The housing crash and Great Recession of 2007-09 left the baseline conforming loan limit static at $417,000 for 11 years. When home prices soared during the pandemic, the conforming loan limit climbed with them.
The limit was increased by a record 18 percent in 2022 and by 12.4 percent in 2023, allowing Fannie and Freddie to buy mortgages exceeding $1 million in many high-cost markets. Last year’s 5.5 percent increase in the conforming loan limit, to $766,550, was more in line with historic trends.
Rocket Mortgage’s new conforming loan limits
The 2024 baseline conforming limits for multi-unit properties for 2024 are $981,500 for two-unit homes, $1,186,350 for three-unit homes, and $1,474,400 for four-unit properties.
Rocket said Friday it will treat loans on two-unit homes of up to $1.027 million in most markets as conforming, and loans of up to $1.54 million on four-unit properties.
In higher-cost markets, Fannie and Freddie are allowed to purchase bigger mortgages based on a multiple of the median home value, up to a ceiling that’s equal to 150 percent of the baseline conforming loan limit.
In 152 counties and Census areas where homes are costlier, the 2024 ceiling for one-unit properties is $1,149,825 in Alaska, Hawaii, Washington, D.C., and a number of high-cost markets in states like California, Colorado, Maryland, Massachusetts, New Jersey, New York and Virginia.
Rocket is raising its ceiling for loans on one-unit properties to be treated as conforming in Alaska and Hawaii to $1.20 million, and to $2.31 million for four-unit properties.
Editor’s note: This story has been updated to correct that Fannie Mae forecasters expect home prices to appreciate at an annual rate of 6.3 percent during Q3 2024.
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