FHA and GSE Loan Limits Will Increase in 2023

FHA and GSE (Fannie Mae / Freddie Mac) loan limits are set to increase again in 2023, a silver lining for builders contending with slow new home demand in the wake of 6% mortgage rates and high inflation. Though loan increases will vary by MSA in 2023, every major market is expected to see at least a $51K loan limit increase in the year ahead.

FHA loans are designated primarily for entry-level buyers with low down payments and credit scores, and according to John Burns Real Estate Consulting, the new loan limit will allow this market segment to qualify for a higher balance mortgage in 2023.

GSE loans go primarily to higher credit entry-level and move-up buyers, who previously would have had to qualify for a jumbo loan.

Many new homes are priced right above today’s loan limits, so this will open up the pool of potential home buyers next year.

Loan limits are indexed against home price appreciation from the prior year. We expect these numbers will stay flat for some time since home prices are now falling in many areas, and the government typically does not lower the limit when the market corrects.

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