Conforming Loan Limits for 2024 in California – What Homebuyers Need to Know

California’s housing market is notoriously expensive especially in coastal metro areas like San Francisco and Los Angeles. This means conforming loan limits, which determine the maximum size of a conventional mortgage that meets affordable housing goals, are higher here than most other parts of the country.

For 2024, the baseline conforming limit set by the Federal Housing Finance Agency (FHFA) for most California counties is $766,550 for a single-family home, up from $726,200 in 2023. However, in high-cost counties like Los Angeles and San Francisco, the limit is much higher at $1,149,825.

Understanding these conforming loan limits is crucial for California homebuyers using low down payment mortgage programs this year. Exceeding them means you’ll need a jumbo loan with higher rates and stricter requirements.

What is a Conforming Loan?

A conforming loan is a conventional mortgage that conforms to limits set each year by the FHFA for Fannie Mae and Freddie Mac. These government-sponsored enterprises purchase conforming loans from lenders to replenish their capital and promote affordable housing.

The major benefits of conforming loans are:

• Lower mortgage rates – Non-conforming jumbo loans cost more
• Easier to qualify – Conforming guidelines aren’t as strict
• Lower mortgage insurance – MI on conforming loans is less expensive

As long as you stay under the conforming limit for your county and meet basic requirements, you can qualify for low down payment programs like 3% down conventional loans

How Are Conforming Loan Limits Determined?

The methodology behind conforming loan limits aims to balance affordable housing goals with responsible lending. Areas with higher home prices need higher limits to make ownership feasible.

Specifically, here is how the FHFA sets limits each year:

• National Baseline – The baseline limit across most of the country is adjusted based on average home price appreciation using FHFA home price indexes. For 2024, the baseline conforming limit is $766,550.

• High-Cost Areas – In more expensive real estate markets, limits are set higher, up to 150% of the baseline, depending on area median home values.

• HERA Ceiling – The Housing and Economic Recovery Act established an upper limit or “ceiling” on conforming loans in high-cost areas of 150% of the baseline. For 2024, the ceiling is $1,149,825.

Essentially, conforming limits rise along with home prices nationwide and in metro areas specifically to promote affordable mortgage financing.

2024 Conforming Loan Limits in California

As mentioned already, the baseline conforming limit for California counties in 2024 is $766,550, up from $726,200 last year. High-cost counties like San Francisco and Orange have limits of $1,149,825.

Here are the specifics by county:

• Los Angeles County – $1,149,825
• Orange County – $1,149,825
• Santa Clara County – $1,149,825
• Alameda County – $1,149,825
• San Mateo County – $1,149,825
• San Francisco County – $1,149,825
• San Diego County – $1,006,250
• Santa Cruz County – $1,149,825
• Marin County – $1,149,825
• Contra Costa County – $1,149,825
• Monterey County – $920,000
• Napa County – $1,017,750
• Santa Barbara County – $838,350
• Ventura County – $954,500
• San Luis Obispo County – $929,200
• Sonoma County – $877,450
• All Other Counties – $766,550

These limits apply to any conforming loan closed after January 1, 2024, even if you originally applied last year. It’s the closing date that matters.

How Conforming Loan Limits Affect Down Payments

Low down payment mortgage options like 3% down conventional loans must conform to county limits. Exceeding them forces you into a jumbo loan with higher rates/fees and a minimum 10% to 20% down.

For example, if a home costs $900,000 in Alameda County, the $1,149,825 conforming limit lets you put just 3% or $27,000 down with a conforming loan.

But in Fresno County with its limit of $766,550, that same $900,000 home requires $133,450 down (15%) to stay under the conforming limit with a jumbo loan.

Always structure your purchase to stay under local conforming limits when using low down payment programs. Even 1 dollar over the limit causes issues.

Conforming Loan Requirements

While conforming loans offer flexible qualifying, you still need to meet baseline requirements for approval. Here are some key eligibility standards:

Down Payment – At least 3% is required on a purchase. 20% down avoids mortgage insurance.

Credit Scores – Minimum scores start around 620, but 720+ is ideal for the best rates.

Debt-to-Income Ratio – Your total monthly debt divided by gross monthly income should be below 50%.

Loan Amounts – Stay under the conforming limit for your county based on the home’s purchase price or appraised value – whichever is lower.

Property Types – Single-family homes, condos, townhomes, and even 2–4 unit properties are eligible.

Occupancy – You can qualify for a conforming loan on a primary residence, second home, or investment property.

As long as you fit these parameters, a conforming mortgage offers the most affordable financing option for California homebuyers.

Alternatives If You Exceed Conforming Loan Limits

Not everyone can stay under their county’s conforming limit, especially when purchasing higher-priced homes. If you have to exceed the limit, here are two options:

Jumbo Loans – Jumbo mortgages come with higher rates, more fees, and stricter requirements like minimum 10% to 20% down payments. But they let you borrow above conforming limits if you qualify.

Two Mortgages – Another tactic is splitting your financing into a conforming first mortgage and a secondary non-conforming loan. This minimizes higher jumbo rates/fees.

While not ideal, these alternatives let you buy a home even if it pushes you over conforming limits. Just anticipate higher costs.

The Takeaway

Conforming loan limits represent maximums for affordable conventional mortgages backed by Fannie Mae and Freddie Mac. These limits rise annually based on home prices.

For 2024, the baseline conforming loan limit in California is $766,550 but goes higher in expensive metro counties. Staying under these limits is crucial for low down payment programs.

Even being one dollar over conforming limits in your county causes financing issues. Always structure your purchase to stay under the limit and enjoy the benefits of affordable conforming loans.