Question of the Day: What are conventional loan limits?

Dec. 16, 2011

Question of the Day: What are conventional loan limits?

Q: What are conventional loan limits?

A: These are limits imposed by Fannie Mae and Freddie Mac on the amount of money you can borrow to finance a home purchase. The loan limit generally increases each year and applies to single-family homes in the 48 contiguous states, with higher limits in Alaska, Hawaii, Guam and the U.S. Virgin Islands and on homes with two, three and four units.

For example, in 2008, the loan limit is $417,000 for a single-family owner-occupied property, $533,850 for a two-unit property, $645,300 for three-units, and $801,950 for four-units.

Theoretically, no limit applies to the amount a lender can provide under the VA program. But in practice, local lenders generally lend up to $417,000 in 2008 with no money down.

There are also loan limits for owner-occupied homes under the FHA 203(b) program, the most common FHA option. The limits vary depending on whether you live in a "high cost" or "low cost" area, as well as the number of units that are being financed. In general, the FHA loan limit is $362,790 for a single-family home in high-cost areas and $200,160 in low-cost areas.

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