On Nov. 25, 2025, the Federal Housing Finance Agency (FHFA) announced the conforming loan limit (CLL) will increase in 2026 from $806,500 to $832,750. This is an increase of 3.25% or $26,250 from 2025. If you’re planning to purchase or refinance a home in 2026, this article discusses what conforming loans are and what the new limits might mean for you.
What is a Conforming Loan?
A conforming loan is a mortgage that falls within loan limits set each year by the Federal Housing Finance Agency (FHFA) and that meets the eligibility standards for purchase by Fannie Mae and Freddie Mac, the two government sponsored enterprises (GSEs). Because these loans can be sold into the secondary market, they may offer some borrowers more options or lower costs than loans that are above the conforming limit (often called “jumbo” loans). When lenders review an application for a conforming loan, they typically consider factors such as:
- Your overall credit history and credit score
- Your debt-to-income ratio (how much of your gross monthly income goes toward debt payments)
- The size of your down payment and available assets
- Your employment and income history
These factors are examples only. Specific requirements vary by lender, loan program, property type and other details of your situation, so it’s important to talk with a mortgage professional about your individual circumstances.
Why are the Increased Conforming Loan Limits a Good Thing?
As the price of homes have continued to increase the past few years, homebuyers and homeowners wanting a mortgage loan that exceeds the 2025 conforming loan limit ($806,500) would be forced to acquire a more expensive, non-conforming jumbo loan for example. The 2026 CLL increase makes it easier for these homebuyers to qualify for a more expensive home with the conforming loan option still on the table.
How are Conforming Loan Limit Increases Calculated?
The Housing and Economic Recovery Act (HERA) requires FHFA to adjust conforming loan limits each year to reflect the change in the average U.S. home price. According to the most recent FHFA House Price Index® (FHFA HPI), home prices increased by an average of 3.26%, between Q3 2024 and Q3 2025. Therefore, the limits in 2026 will increase by the same percentage. While the new limit of $832,750 applies to most of the United States, it’s important to note the actual dollar amounts can vary if you live in a high cost of living area such as Alaska, Hawaii, and parts of California, Colorado, and the east coast. This map shows the actual limits for each county.
What is the Difference Between a Conventional Loan and a Conforming Loan?
A conventional loan is a mortgage loan secured by a private lender, such as your bank, and receives no federal backing, as one would with an FHA loan, VA loan or USDA loan. When conventional loans fall within the limits set by the FHFA and meet certain underwriting guidelines, they are considered “conforming” and can later be sold to Fannie Mae or Freddie Mac. This a benefit to banks because it allows them to increase their capital to offer more loans to more customers.
Why are There Limits to Conforming Loans?
Limits are set for conforming loans so that Fannie Mae and Freddie Mac can serve more banks and homebuyers across the country. The two entities prefer to fund a higher number of smaller mortgages than a smaller number of large mortgages.
What if I Need a Mortgage Over the Conforming Limit?
If you’re planning to buy or refinance a home in 2026 and the amount you need to borrow is higher than the conforming loan limit of $832,750, you may still have options. Many lenders offer “jumbo” loans, which are mortgage loans that exceed the conforming limits. Jumbo loans generally have different qualification standards than conforming loans. For example, lenders may:
- Look for stronger overall credit profiles
- Review your debt-to-income ratio more closely
- Require larger down payments
- Ask for additional documentation or verification of income and assets
Offer different interest rate options than conforming loans
The 2026 Conforming Loan Limit increase may give qualified homebuyers more flexibility when purchasing or refinancing a home in 2026. If you have questions about the new limits or any other mortgage needs, an FNBO Mortgage Loan Officer can help.
This article is for educational purposes only and does not constitute a commitment to lend. All loans are subject to credit approval and program guidelines. Terms, conditions and restrictions apply and may change without notice.
