Key takeaways

• FHFA sets conforming loan limits based on yearly home price growth
• The standard one-unit limit rises to $832,750 for 2026; high-cost areas exceed $1,249,125.
• Conforming loans must follow Fannie and Freddie rules on underwriting
• Jumbo loans exceed conforming limits and often require stronger borrower qualifications

In 2026, the FHFA will raise conforming loan limits in line with a 3.26% rise in national home prices, increasing the standard one-unit cap to $832,750 and pushing high-cost limits slightly above $1.249 million. These limits shape which mortgages Fannie Mae and Freddie Mac can purchase, package and sell to investors.

The Federal Housing Finance Agency (FHFA) has set the conforming loan limits for 2026, the maximum amount a borrower can take out on a mortgage that’s eligible for Fannie Mae and Freddie Mac to purchase and guarantee.¹

For 2026, the standard limit for a one-unit home will rise to $832,750 in most of the U.S., up from $806,000 in 2025. In high-cost markets—areas where home prices are significantly above the national average — the limit will increase to slightly over $1.249 million.

Conforming loans are the most popular conventional mortgages in the U.S. and adhere to guidelines set by Fannie Mae (Fannie) and Freddie Mac (Freddie), the two government-sponsored housing finance companies. The annual limits adjust each year based on nationwide home price trends.

House prices increased 3.26% on average between the third quarters of 2024 and 2025, according to the FHFA, which oversees Fannie and Freddie. Therefore, the baseline conforming loan limit in 2026 will increase by the same percentage.²  

Here’s why conforming loan limits are so important to borrowers, lenders, and the housing market. 

Why do conforming loan limits matter?

The conforming loan limit is the maximum amount a borrower can take out on a mortgage that Fannie Mae and Freddie Mac purchase from banks and other types of mortgage lenders.³

The two mortgage finance companies bundle conforming loans into mortgage-backed securities and sell them to investors with federal guarantees. To attract investors, Fannie and Freddie ensure the timely payment of principal and interest on the mortgages underlying the MBS, even if the borrower defaults on the loan.⁴

The process keeps mortgage credit flowing back to borrowers. Selling conforming loans to Fannie and Freddie — rather than keeping them on their books — allows mortgage lenders to free up cash to underwrite more loans. But Fannie Mae and Freddie Mac aren’t allowed to buy mortgages that don’t fall within conforming loan standards.

Fannie, Freddie standards go beyond loan size

Conforming loans have other requirements besides maximum loan size. Borrowers must meet underwriting and eligibility standards related to credit scores, debt-to-income ratios, down payments, and other factors such as employment and income history.⁵ 

For conforming loans, borrowers need to have minimum down payments of at least 3% to 5% of the home purchase price.⁶ If a down payment is less than 20%, the borrower will typically need private mortgage insurance.

Debt-to-income (DTI) ratios are also very important for conforming loans because they show the borrower’s ability to handle new debt. Borrowers with lower credit scores or smaller down payments often must have an overall DTI ratio of 36% or less. Borrowers with larger down payments and higher credit scores can have a DTI of up to 45%.⁷

Because conforming loans follow the standardized guidelines set by Fannie and Freddie, the underwriting process is often more uniform and predictable, which can lead to a faster and smoother closing on a home purchase.

Read more: Saving for a home: The states where a 10% down payment comes together fastest

What are non-conforming and jumbo loans?

A non-conforming loan is a mortgage that does not meet the specific guidelines set by Fannie and Freddie.⁸

One of the most common types of non-conforming loans are so-called jumbo mortgages. They exceed conforming loan limits and therefore aren’t eligible to be purchased and guaranteed by Fannie and Freddie.  

Jumbo loans are often used for higher-priced homes or buying in markets where conforming limits might not cover typical property values. Lenders must keep them on their own books or sell them into the secondary mortgage market without federal guarantees, which can lead to higher costs and stricter requirements for borrowers.⁹

Borrowers seeking a jumbo loan might need stronger credit scores, larger down payments, lower debt-to-income ratios, and significant cash reserves. These loans may also come with higher interest rates because of lender risk.

Jumbo loans aren’t the only type of non-conforming mortgages. Interest-only loans, seller-financing, and other loans that cater to borrowers in more unique situations aren’t eligible for backing by Fannie and Freddie.¹⁰ 

Read more: Conditional loan approval: How it plays into the homebuying process

Conventional versus government loans

The terms conforming loans and conventional loans are often used interchangeably but they’re not the same exact thing. Conforming loans are the most common type of conventional mortgage, but non-conforming loans also fall under the conventional umbrella.¹¹

A conventional mortgage is any type of mortgage that is not insured by a federal agency such as the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA). Those government agencies differ from Fannie and Freddie, which are companies with a federal mission and backing.¹²

Government loans from the FHA and other agencies can be appealing to buyers who may not qualify for a conventional or conforming mortgage. Here are some of the many key features:¹³

• FHA loans. Buyers with credit scores as low as 500 may qualify with a 10% down payment, while those with scores of 580 or higher may qualify with as little as 3.5% down. FHA requires both upfront and annual mortgage insurance premiums (MIP) for all borrowers.
• VA loans. Available only to eligible service members, veterans, and their spouses, VA loans offer benefits conventional loans don’t — such as no down payment and no private mortgage insurance.
• USDA loans. Designed for buyers in designated rural areas, USDA loans require no down payment although borrowers may pay a guarantee fee, typically about 1% of the loan if paid upfront.

Read more: What is a conventional loan?

The takeaway for homebuyers

As home prices continue to shift, annual updates to conforming loan limits help ensure that standard mortgages remain accessible to most buyers. Understanding where these limits fall — and how they compare with jumbo and government-backed loan options —can help borrowers determine which type of financing best fits their needs.

This content is for informational purposes only and is not intended to provide investment, legal, tax recommendations or financial advice. Readers should consult the official FHFA website, www.fhfa.gov, for information.