Confirming LoanLimits un 2025

Conforming Loan Limits in 2025: What They Are & Why They Matter

By Douglas Sorto

28 Jan

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Buying a home can feel overwhelming, especially when you’re faced with terms like "conforming loan limits." But don’t worry—understanding conforming loan limits isn’t as complicated as it seems. Knowing about conforming loan limits can help you make smarter decisions when buying or refinancing a home in 2025.

If you’re wondering how these conforming loan limits work, why they matter, and what they mean for homebuyers in California, you’re in the right place. Let’s break it all down.

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What Is the Conforming Loan Limit?

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The conforming loan limit is the maximum amount you can borrow through a loan that Fannie Mae or Freddie Mac will buy from your lender. Each year, the Federal Housing Finance Agency (FHFA) sets these conforming loan limits, adjusting them based on home price trends.

For 2025, these conforming loan limits have increased to keep up with rising property values. This adjustment makes it easier for buyers to qualify for competitive loan terms without needing a jumbo loan.

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Conforming Loan Limits for 2025

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The 2025 conforming loan limit for most areas in the U.S. is $756,200. However, in high-cost areas—like many parts of California—the limit is higher, going up to $1,134,300. These conforming loan limits ensure that more buyers can access affordable financing options that fall within the standard range.

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What Is the 2025 Conforming Loan Limit in California Counties?

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California is known for its pricey real estate market, and the conforming loan limits here vary by county.

Standard Areas: $756,200
High-Cost Areas (like Los Angeles, San Francisco, and Orange County): Up to $1,134,300

If you’re buying a home in a high-cost county, these higher conforming loan limits mean you can borrow up to $1,134,300 without needing a jumbo loan.

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‍What Is a Conforming Loan?

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A conforming loan is a mortgage that stays within the FHFA’s conforming loan limits and meets requirements set by Fannie Mae and Freddie Mac. These loans are popular because they offer lower interest rates and easier qualification compared to nonconforming loans.

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Why Choose a Conforming Loan?

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Lower Rates: Backed by Fannie Mae and Freddie Mac, conforming loans typically have lower interest rates.
Easier to Qualify: The requirements for conforming loans are generally less strict than for nonconforming loans.
Flexible Options: Borrowers can choose from fixed-rate or adjustable-rate mortgages within the conforming loan limits.

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What Is a Nonconforming Loan?

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If you need to borrow above the conforming loan limits in your area, you’ll need a nonconforming loan, commonly known as a jumbo loan. These loans are not backed by Fannie Mae or Freddie Mac and come with:

Higher Interest Rates: Because they’re riskier for lenders.
Stricter Requirements: You’ll need a higher credit score and a larger down payment.
Less Flexibility: Options might be more limited compared to conforming loans.

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How Do the Conforming Loan Limits for 2025 Work?

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Let’s say you’re buying a home in California:

If your loan amount is $756,200 or less (in a standard area), it falls within the conforming loan limits.
If you’re buying in a high-cost area and your loan amount is $1,134,300 or less, you’re still within the conforming loan limit.
If your loan exceeds these conforming loan limits, you’ll need a jumbo loan.

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New Conforming Loan Limits for 2025 in High-Cost Areas

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High-cost areas, like San Francisco or Los Angeles, have higher limits because homes there are more expensive. This adjustment allows more buyers to qualify for conforming loans, which come with lower rates and easier terms than jumbo loans.

Example:

You’re buying a home in Los Angeles with a loan amount of $1,100,000. Since this is below the high-cost area limit of $1,134,300, you qualify for a conforming loan. If your loan amount were $1,200,000, you’d need a jumbo loan instead.

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What to Consider Before Borrowing Above the Conforming Loan Limit

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If you’re thinking about borrowing more than the conforming loan limits, keep in mind:

Higher Interest Rates: Jumbo loans often come with steeper rates.
Stricter Qualifications: You’ll need excellent credit and a significant down payment.
Affordability: Make sure the larger monthly payments fit into your budget.

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Conforming Loans vs. Jumbo Loans: Which Is Right for You?

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Conforming Loans: Ideal for buyers who want lower rates and easier qualification.
Jumbo Loans: Best for high-value homes but require a stronger financial profile.

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The Bottom Line: California’s Conforming Loan Limits for 2025

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The new conforming loan limits for 2025 are great news for California homebuyers, especially in high-cost areas. They make it easier to qualify for affordable loans and avoid the stricter terms of jumbo loans.

If you’re considering buying a home or refinancing, understanding conforming loan limits can help you make the best decision for your financial future. And remember, there’s no one-size-fits-all answer—what works for you depends on your budget, goals, and where you’re buying.

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