Navigating FHA and Conventional Conforming Loan Limits

Conforming Loan Limits for 2025

The home-buying process is exciting yet complex, especially when dealing with mortgage options. The two common loan types, Federal Housing Administration and conventional loans, limit borrowing based on location. Find five key difference features of the FHA and conventional loan limits and make the best housing purchase choice.

What Are FHA Loan Limits?

FHA loans are mortgage loans guaranteed by the government that enable buyers to put only as much as 3.5% as their down payment. These loans have maximum loan limits and are dependent on the FHA. The baseline FHA loan limit is set at a national floor; however, specific limits vary by county and depend on the median house price in your location.

For 2025, the basic FHA loan limit across most of the nation is $498,257 for a single-family house. Moreover, in more expensive real estate markets, the limit for FHA loans is $1,149,825 in the highest-cost places. FHA loan limits make lending more affordable, but you can qualify for more in the case of a conventional mortgage.

What Are Conventional Loan Limits?

Conventional loans are mortgages that meet the criteria of Fannie Mae and Freddie Mac, two government-sponsored enterprises. County median home prices dictate the established baseline for conventional loan limits. In 2025, the standard limit for most areas is $ 766,550. That $1,149,825 is the top limit for the affordable housing market category.

Unlike Fannie Mae / Freddie Mac loans conventional loans do not require mortgage insurance with 20% or more down payment. The caps of their allowed amount is also higher giving you the advantage of investing in a pricier property. On the contrary, with a conventional loan, you’ll need a better credit score and a larger down payment.

Key Differences Between FHA and Conventional Loan Limits

When researching mortgage options, pay close attention to the loan limits in your county and neighborhood housing costs. Here are some key distinctions:

• FHA loans have lower down payment requirements but more conservative borrowing limits based on median home values. Conventional loans have higher limits but expect larger down payments.
• You’ll need a 580 FICO score for an FHA loan but often 720+ for a conventional mortgage. Credit history plays a bigger role than conventional loans.
• Conventional mortgages don’t have ongoing MIP payments but FHA loans do, increasing long-term costs.
• FHA loans can be an obstacle in more affluent neighborhoods where home prices exceed loan limits. Conventional loans work better in high-cost areas.

The best loan type depends on your financial profile, down payment funds, and the pricing market in your desired location. Talk to a loan officer to map out whether an FHA or conventional mortgage is the optimal match.

Loan Limits 2025 Table

Let's look at the loan amount for 2025 across different states and locations using the table provided below.

A notable fact is that starting in 2025, several states (including Alaska and Hawaii), Guam, Puerto Rico, and the U.S. Virgin Islands will not have any high-cost areas. This means there are no special limits for specific regions in those locations.

Stay Updated With Conforming Loan Limits Nationwide

As expected, loan limits increased this year in almost all states and counties across the US. Only five counties had unchanged limits, and there can be many reasons for this. What was significant is the fact that 20 high-cost counties shifted to standard limit areas. How exactly will this impact residents?

• Homebuyers in counties with increased limits may both rejoice and worry. In theory, they can more easily get expensive mortgages, but this will surely drive up prices and competition.
• Homeowners in counties that shifted from high-cost to standard may benefit from lower mortgage rates but face declining home values due to reduced demand.
• Homebuyers in counties shifted to high-cost areas may face tighter credit requirements and higher rates but also see rising home values from increased demand for expensive mortgages.

But what's the overall impact on the housing market? The expanded loan limits in most areas could spur demand and potentially increase home prices. The shift of some counties from high-cost to standard could alter local markets and housing affordability.