As home prices continue to rise and the market remains competitive, understanding conforming loan limits in 2025 is important for both first-time buyers and seasoned homeowners.
These limits can directly impact your borrowing power, determine your loan eligibility and guide your financing options.
What's in this article?
Whether you’re buying, refinancing or tapping into your home equity, staying informed can help you make confident, smart choices.
What is a conforming loan?
A conforming loan meets the criteria established by the Federal Housing Finance Agency (FHFA) and is eligible for purchase by government-sponsored enterprises like Fannie Mae and Freddie Mac.
These loans must adhere to a specified dollar cap, which is updated annually to reflect shifts in the average U.S. home price.
Any mortgage that exceeds this limit is categorized as a non-conforming or jumbo loan, which typically comes with:
- Stricter credit requirements
- Higher interest rates
- Larger down payments
Conforming loans are often preferred by borrowers due to their accessibility and cost-effectiveness.
Because these loans are guaranteed by Fannie Mae and Freddie Mac, lenders are often more willing to offer favorable terms.
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2025 Conforming loan limits: What’s new?
National baseline
As of January 1, 2025, the national baseline conforming loan limit for a one-unit property has increased to $806,500, up from $766,550 in 2024.
This change reflects a continued upward trend in home prices across most U.S. markets.
High-cost areas
In high-cost areas (including parts of California, New York and Washington, D.C.), loan limits are even higher.
These areas may have limits up to $1,209,750, depending on median home values in specific locations. If you are purchasing in one of these markets, a higher conforming limit means more financing flexibility without jumping into jumbo loan territory.
These changes aim to accommodate growing housing expenses, ensuring that conforming loans remain within reach for average buyers even in more expensive markets.
Conforming loan limit history at a glance
Here’s a quick look at how the conforming loan limits have evolved over the past five years:
- 2025: $806,500
- 2024: $766,550
- 2023: $726,200
- 2022: $647,200
- 2021: $548,250
- 2020: $510,400
Each year, the FHFA evaluates these limits based on national average home prices using the Housing Price Index (HPI).
This regular adjustment helps to make sure buyers continue to have access to mortgage financing despite inflation and market shifts.
Benefits of conforming loans
Here are some key advantages of choosing a conforming loan:
- Lower interest rates: These loans are typically less risky to lenders, which often results in better rates for borrowers.
- Smaller down payments: You may qualify with as little as 3% down.
- Flexible terms: Choose from various term lengths, including 15, 20 and 30 years.
- Easier qualification standards: Compared to jumbo loans, conforming loans usually have more relaxed credit score and income requirements.
- Backed by Fannie Mae and Freddie Mac: These loans are considered safer because they meet strict underwriting guidelines.
In addition, conforming loans offer more predictable loan servicing.
Because they follow standardized guidelines, it’s easier for borrowers to understand their mortgage terms and conditions, estimate closing costs and anticipate long-term payments.
Conforming loan requirements in 2025
To qualify for a conforming loan in 2025, you’ll need to meet the following criteria:
- Credit score: Minimum of 620 (680 or higher recommended for the best interest rates)
- Debt-to-income ratio (DTI): Generally capped at 45%, though some lenders allow up to 50%
- Down payment: As low as 3% for first-time and repeat buyers
- Loan-to-value ratio (LTV): Up to 97%
- Stable income and employment: Consistent job history and verifiable income
Note: Mortgage insurance (PMI) is typically required if your down payment is less than 20%.
Borrowers should also be prepared to provide detailed documentation such as W-2s, tax returns, bank statements and proof of employment.
These documents help lenders confirm that you meet income and asset requirements.
How higher loan limits impact buyers and homeowners
An increased conforming loan limit means:
- Greater buying power: You can afford a higher-priced home while staying within conforming guidelines.
- Refinancing flexibility: Existing homeowners can refinance larger balances under conforming terms.
- Avoiding jumbo loans: You can stay within more favorable underwriting and rate structures.
Let’s look at what financing opportunities higher loan limits offer to homebuyers and homeowners.
For homebuyers
Higher loan limits reduce the need to consider jumbo loans when purchasing in competitive or high-cost areas. That means a lower down payment requirement and a smoother approval process.
Buyers also benefit from a wider selection of homes. With the increased limits, more properties fall within conforming loan thresholds, which helps expand your housing options.
For homeowners
Rising limits make it easier to refinance your mortgage or tap into your home equity without crossing into non-conforming territory. This is especially helpful if your property has appreciated significantly.
Homeowners may also use cash-out refinancing to fund renovations, consolidate debt or invest in other opportunities—all while enjoying the benefits of conforming loan terms.
Strengthen your offer with Get Committed®
Compass Mortgage offers a unique advantage through our Get Committed® program.
This fully underwritten loan commitment gives you the confidence and credibility of a cash buyer, even before you make an offer.
With Get Committed®, you can:
- Lock your interest rate before house hunting
- Compete more effectively in tight markets
- Close in as little as 15 days
- Avoid last-minute financing complications
- Strengthen your position with sellers who value certainty
It’s more than a pre-approval. It’s your key to winning in today’s fast-paced real estate environment.
Whether you’re a first-time buyer or a seasoned investor, this program can help you stand out and move forward with confidence.
Closing tips: What to avoid
Even if you’ve received a full loan commitment, your mortgage isn’t final until closing day.
Lenders continue to verify your financial status during the underwriting process, and last-minute changes can delay or even derail your loan.
To ensure a smooth path to the finish line, steer clear of these common mistakes:
- Opening new credit lines: This can lower your score or change your DTI.
- Taking on new debt: Car loans, credit cards or furniture financing can impact your eligibility.
- Changing jobs: Lenders prefer stability; switching jobs can delay or jeopardize your loan.
- Large purchases: Big-ticket items like appliances or vacations can affect your credit profile.
- Not disclosing information: Be up-front with your lender to avoid surprises during underwriting.
Additionally, keep a close eye on your bank accounts. Lenders often verify assets multiple times before closing, and sudden withdrawals or unaccounted deposits can raise red flags.
Always consult with your loan officer before making any major financial decisions.
Ready to explore your loan options?
Whether you’re buying your first home, upgrading or refinancing, Compass Mortgage is here to help you navigate the process with confidence.
Apply with Compass Mortgage today or call us at (877) 635-9795 to speak with one of our loan officers.