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2020 Mortgage Limits for Conventional Loans

2020 mortgage limits reflect a consistent trend in the real estate industry: a continual, steady increase in home pricing. If you plan on purchasing a home in 2020, it helps to know these limits and understand why they are set at a certain amount.

What Do We Mean By “Mortgage Limits?”

It’s important to understand that we are not talking about limits on all mortgages across the whole spectrum of home financing. In this case, we are simply talking about loans that are supported by Fannie Mae and Freddie Mac. Essentially, these two government-backed organizations can only purchase loans up to a certain limit, so “conventional” loans can only be written to a certain amount.

This does not, however, mean that loans above the “limits” are impossible. There are other options, including jumbo loan, which by definition are above the conventional-loan limits.

So when we talk about “loan limits” we are only talking about the limits for conventional loans. But these limits will impact many people. Conventional loans make up the largest percentages of all mortgages, so there is a good chance your financing will be affected by the limit.

How Were the 2020 Mortgage Limits Determined?

Limits for conventional loans are changed every year to reflect the current housing market. Limits are set for each county (more on baseline and local limits below), but there is a specific equation used to determine the amount.

Under the Housing and Economic Recovery Act of 2008, the Federal Housing Finance Agency (FHFA) determines the loan limits for each area. This number is 115% of the median home value in a real estate market. So if the median home price is $600, the loan limit would be $690,000. ($690,000 is 115% of $600,000.)

What are the 2020 Mortgage Limits?

Mortgage Limits: A Regional Number

It’s important to understand that mortgage limits are not universal across the country. These numbers are determined by specific pricing in different regions, so each section of the country will have a unique number. New York City, for example, obviously has much higher housing costs than rural Kansas; if the limits for rural Kansas were applied to the New York metropolitan area, people would have a hard time purchasing properties, at least with conventional loans. Therefore, limits are determined on a county-by-county basis to more accurately reflect local pricing.

National Mortgage Limits: The Minimum or “Baseline”

Across the country, the lowest loan limit is $510,400 for single-family homes. This means that no matter where you live, whether it’s remote Wyoming or the middle of Los Angeles, you will have access to at least $510,400, assuming you qualify. ($510,400 may be the limit, but you would need to qualify for this amount.)  This is called the “baseline” limit.

The new limit is a significant increase from the baseline limit of 2019. Last year, the baseline limit was $484,350. As we have discussed in other articles, home pricing across the country has increased significantly, and this increase in the baseline loan limit reflects this increase in pricing.

Conventional loans also cover properties up to four units, and these properties have loan limits as well. The baseline limit for a two-unit property is $653,550, so if you want to purchase a duplex anywhere in the United States, assuming other factors help you qualify, you can get a loan for this amount. If you want a three-unit property, the available baseline loan limit is $789,950, and if you want a four-unit property, the available loan limit is $981,700. That’s right, because of median prices across the country, the baseline loan limit for a four-unit property is almost $1 million.

2020 Mortgage Limits in San Diego, CA

San Diego skyline in a sunny day.
The loan limit for a single-family home in San Diego County is $701,500.

Here in San Diego, we are all aware that home prices are much higher than most of the United States. While we are not the most expensive in the country (we’re not even the most expensive in California), median home prices in San Diego County have driven up loan limits. The 2020 mortgage limits in San Diego are $701,500. If you want a duplex in San Diego County, the loan limit is $898,050. Three-unit properties have a mortgage limit of $1,085,550, while four-units can be purchased with conventional loans up to $1,349,050.

2020 Mortgage Limits in Imperial County

In Imperial County, which is directly east of San Diego County and finishes California’s southern border with Mexico, housing is priced significantly lower, and this is reflected in the loan limits. In this case, the loan limits fit with the baseline limits found across the country.

For a single-family home, the 2020 mortgage loan limit is Imperial County, California is $510,400. The same baseline loan limits for multi-unit housing applies to this area. This is an example of how two nearby areas can have drastically different home prices.

2020 Mortgage Limits in Riverside County

In Riverside Country, the same baseline loan limits apply. If you are purchasing a property in this area, you are subject to the baseline loan limit for single-family and multi-unit properties.

2020 Mortgage Limits in Orange County

As most people know, the home prices in Orange County, California are also high. This is reflected in the loan limits, as they are even higher than San Diego. For homes in these areas, the 2020 mortgage limit is $765,600. For people wanting to purchase a duplex, the total is $980,325, while the limit for a three-unit property is $1,184,925. If you want a four-unit property in Orange County, you can access conventional loans above $1.47 million.

Important Note: You May Not Qualify for the Limit

Is worth pointing out one final time that not all borrowers will qualify for the limit set by the FHFA. The limit is simply the maximum amount that lenders can give out and still have the benefits of a conventional loan. So you may qualify, as an example, for only $400,000, not the $510,400 set by the FHFA.

Take Advantage of the Growing Loan Limits Today!

If you want to take advantage of the current loan limits, contact our staff today. Whether you are buying in San Diego or another area, let us help you have the right financing for your specific needs.