The Federal Housing Finance Agency — regulator and conservator for Fannie Mae and Freddie Mac — is increasing the conforming loan limits in 2026 by just 3.26% or $26,250 for the 2026 calendar year.
This means the maximum conforming mortgage size for one unit goes to $832,750 from the 2025 maximum limit of $806,500.
Althought effective Jan. 1, most lenders will start funding on the new loan size now and hold them until January to sell them to the mortgage giants.
The increase applies to Los Angeles, Orange, San Diego, Riverside and San Bernardino counties.
The annual increase is markedly smaller than in the last several years. From 2024 to 2025 the increase was 5.2%, 2023 to 2024 saw an increase of 5.5% and 2022 to 2023 saw an exploding increase of 12.2% in the post covid days.
The Housing and Economic Recovery Act requires FHFA to adjust the baseline conforming loan limit value to reflect the change in the average U.S. home price from 2024’s third quarter compared with the same quarter in 2025. The conforming loan limit increases by the same percentage.
High-cost areas such as L.A., Orange and San Diego counties receive a second-tier loan limit, named high-balance or jumbo mortgages. For 2026, L.A. and O.C. will have a high balance limit all the way up to $1,249,125. In San Diego County, that limit lands at $1,104,000.
High-balance loans carry an interest rate about one-quarter percent to one-half percent higher than conforming loans.
As an aside, a well-qualified borrower would need $159,000 in annual income to buy a $1,041,000 home with 20% down, maxing the conforming loan amount at $832,750. The total payment would be $5,961. This assumes no debt and a 5.625% 30-year fixed rate mortgage.
It would take an annual income of $243,500 to buy a $1,561,400 property, with about 20% down, offering the maximum high-balance loan amount of $1,249,125. The total payment would be $9,132. This also assumes no debt and a 5.99% interest rate.
Two, three and four-units carry separate, higher loan limits.
Conforming loans for two-units or duplex have a maximum loan amount of $1,066,250, three-units is $1,288,800 and a four-unit property offers a maximum loan amount of $1,601,750.
Los Angeles County and Orange counties offer high-balance loan limits for units that go like this: two units $1,599,375, three-units $1,933,200 and a fourplex offers a maximum loan amount of $2,402,625.
For San Diego County, two-units offers a maximum loan amount of $1,413,350, three-units $1,708,400 and a four-unit property goes up to $2,123,100.
Veteran Administration loans are not limited by and do not follow the FHFA loan limits since the Blue Water Navy Vietnam Veterans Act of 2019.
The Federal Housing Administration calculates its numbers based on the National Housing Act. The 2026 limits have not been announced yet. Historically, the FHA matches the conforming and high balance limits in Los Angeles and Orange counties. San Diego and the inland empire maximum loan limits typically are lower.
Why all the fuss about Fannie and Freddie loan limits?
There is an implicit government guarantee on loans backed by the federal government within those maximum loan limits. The benefit is cheaper mortgage rates (than non-Fan or Fred mortgages), so long as you can meet the underwriting requirements of the mortgage giants.
Going above the loan limits means getting a jumbo loan, which may have as good of loan pricing, but come with tougher qualifying standards.
There are also portfolio bank and credit union mortgages offering varying interest rates and underwriting rules.
One other way to qualify is to use the exotic mortgage pool, called non-qualified mortgages or non-QM. The underwriting rules are looser, but the pricing is always higher than Fannie and Freddie.
Freddie Mac rate news
The 30-year fixed rate averaged 6.23%, 3 basis points lower than last week. The 15-year fixed rate averaged 5.51%, 3 basis points lower than last week.
The Mortgage Bankers Association reported a scant, 0.2% mortgage application increase compared with one week ago.
Bottom line: Assuming a borrower gets an average 30-year fixed rate on a conforming $832,750 loan, last year’s payment was $317 more than this week’s payment of $5,117.
What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages with one point: A 30-year FHA at 5.375%, a 15-year conventional at 5.125%, a 30-year conventional at 5.625%, a 15-year conventional high balance at 5.5% ($832,751 to $1,249,125 in LA and OC and $832,751 to $1,104,000 in San Diego), a 30-year high balance conventional at 5.99% and a jumbo 30-year fixed at 6.125%.
Eye-catcher loan program of the week: A 30-year mortgage, fixed for the first five years at 5.375% with 30% down payment and 1 point cost.
Jeff Lazerson, president of Mortgage Grader, can be reached at 949-322-8640 or jlazerson@mortgagegrader.com.