Did Mortgage Lenders Raise Their Early Bird 2025 Conforming Loan Limits Too High?

Over
the
past
several
years,
mortgage
lenders
have
been
offering
“early
bird”
conforming
loan
limits
for
the
upcoming
year.

This
allows
them
to
make
bigger
loans
that
adhere
to
the
underwriting
guidelines
of
Fannie
Mae
and
Freddie
Mac
without
them
being
considered

jumbo
loans.

Instead
of
waiting
until
January
1st,
they
make
a
projection
for
where
the
loan
limit
will
land
the
next
year
and
offer
it
around
the
fourth
quarter.

For
example,
in
early
October
2023
some
lenders
raised
the
2024
loan
limit
to
$750,000
ahead
of
the
announcement
that
came
in
late
November.

That

loan
limit
wound
up
being
$766,550,
which
meant
the
lenders
who
offered
the
higher
loan
limits
ahead
of
time
didn’t
get
caught
out.

But
that
only
worked
because
home
prices
kept
on
marching
higher
and
higher.

Some
Lenders
Are
Already
Offering
2025
Conforming
Loan
Limits
as
High
as
$803,500

Like
last
year,
lenders
haven’t
waited
for
the
conforming
loan
limit
announcement
in
late
November
to
raise
it.

And
this
year
it
has
come
even
earlier
than
in
years’
past.
It
has
actually
become
a
sort
of
game
between
competing
mortgage
companies
to
be
the
first
out
of
the
gate.

Rocket
Pro
TPO,
the
wholesale
division
of
Rocket
Mortgage,
was
first
to
come
out
with
the
2025
loan
limits
this
year.

On
September
13th,
they
announced
a
limit
of
$802,650,
up
from
the
current
limit
of
$766,550.
This
represents
a
4.7%
increase.

While
that
seems
like
a
fairly
reasonable
estimate,
home
price
appreciation
has
been
slowing
this
year.

At
last
glance,
home
prices
as
measured
by
the
FHFA
HPI

were
up
4.5%
from
July
2023
to
July
2024.

To
come
up
with
the
conforming
loan
limit,
the
FHFA
uses
home
price
movement
from
the
third
quarter
of
the
prior
year
to
current
year
(see
FAQ).

So
we
need
the
August
and
September
data
before
they
can
make
that
determination.

Since
the
YoY
appreciation
is
currently
below
the
4.7%
needed
to
hit
those
projected
2025
loan
limits,
the
next
two
releases
will
need
to
show
home
prices
rising
at
a
faster
clip.
What
if
they
don’t?

What
Happens
If
Home
Prices
Fall
Short
and
the
2025
Loan
Limits
Are
Lower?

Remember
how
I
said
this
has
become
a
game
between
lenders
to
see
who
comes
out
with
the
loan
limits
first?
Well,
it
has
also
become
a
game
of
who
goes
highest.

And
it
appears
that
the
nation’s
largest
lender,
United
Wholesale
Mortgage
(UWM),
has
won
that
battle.

They
weren’t
first,
but
they
came
out
with
the
highest
2025
loan
limit,
offering
to
fund
loans
up
to
$803,500
for
the
remainder
of
2024.

That’s
a
4.8%
YoY
increase
in
home
prices.
Not
much
different
than
Rocket’s,
but
well
above
some
other
mortgage
lenders
who
are
playing
it
a
little
safer.

For
example,
Rate
(formerly
Guaranteed
Rate)
has
only
offered
to
go
as
high
as
$792,000,
while
Pennymac
is
only
willing
to
go
to
$795,000.

Inside
Mortgage
Finance
writer
James
Dohnert

expressed
some
concern
with
these
varying
limits,
noting
that
“it’s
possible
that
some
origination
shops
shot
too
high.”

And
that
if
the
actual
2025
loan
limits
come
in
below
what
these
lenders
are
currently
allowing,
any
of
the
related

conforming
loan
production
would
“inherently
turn
into
non-agency
product.”

At
that
point,
these
lenders
would
either
need
to
keep
the
loans
on
their
books
or
perhaps
sell
them
at
a
discount
(maybe
a
loss)
if
they
wished
to
unload
them.

They
wouldn’t
qualify
for
backing
by
Fannie
Mae
or
Freddie
Mac,
meaning
they
couldn’t
be
sold
to
or
guaranteed
by
the
pair.

This
could
present
problems
for
the
lenders
who
do
a
decent
amount
of
volume
using
these
new
provisional
loan
limits.

It
may
also
change
how
they
offer
early
bird
limits
going
forward
if
home
prices
do
indeed
come
in
lower
than
expected.

Given
how
home
prices
have
been
screaming
higher
and
higher
each
year,
it
has
yet
to
be
a
problem.

But
this
could
finally
be
a
turning
point
as
housing
affordability
finally
weighs
on
appreciation.

Stay
tuned
on
this
one.
It
might
get
interesting.

Which
Lenders
Are
Already
Offering
2025
Conforming
Loan
Limits?

CrossCountry
Mortgage
–
$802,650
Guild
Mortgage
–
$799,125
Movement
Mortgage
–
$802,650
Newrez
–
$795,000
Pennymac
–
$795,000
Rate
–
$792,000
Rocket
Mortgage
–
$802,650
TowneBank
Mortgage
–
$795,000
United
Wholesale
Mortgage
–
$803,500