California Conforming Loan Limits to Go Up in 2021, Due to Rising Prices

Earlier this week, the Federal Housing Finance Agency announced that the conforming loan limits for California will go up in 2021. This is a direct response to rising home values across the state.

The 2021 loan limits for California counties will range from $548,250 to $822,375, for a single-family property. That’s a significant increase over the current caps, which range from $510,400 – $765,600 depending on the county. These changes take effect on January 1, 2021.

California Gets Higher Loan Limits in 2021

The term “conforming loan limit” refers to the maximum size for a regular or conventional mortgage loan. Conventional mortgage products can be sold to Freddie Mac and Fannie Mae, and then resold to investors.

In order to go through this resale process, home loans must meet certain requirements and parameters. And that includes adhering to a maximum size limit.

When a person borrows more than the conforming loan limit for their particular county, it’s referred to as a “jumbo” mortgage. Lenders typically set higher standards and requirements for jumbo loans, due to the larger amount being borrowed. This can include higher credit scores and bigger down payments, among other things.

Conforming loan limits vary by county because they are based on median home values. For the 58 counties within California, the 2021 conforming loan limits will range from $548,250 to $822,375. Pricer real estate markets (with a higher median home price) tend to have higher limits, and vice versa.

Ten of California’s 58 counties are considered “high cost areas” and therefore have the maximum conforming loan limit of $822,375. This applies to most of the San Francisco Bay Area, the Los Angeles metro area, Orange County, and Santa Cruz. See the table below for more details.

Table: Conforming Loan Limits by County

The table below shows the 2021 conforming loan limits for all of California’s counties. This table was adapted from one provided by the FHFA.

Note: The “one-unit” column on the right pertains to a regular single-family home. There are higher limits for multi-family properties, like duplexes and triplex units. Thus, the figures shown below apply to typical home-buying scenarios with a single residency.

CountyOne-Unit Limit
ALAMEDA$822,375
ALPINE$548,250
AMADOR$548,250
BUTTE$548,250
CALAVERAS$548,250
COLUSA$548,250
CONTRA COSTA$822,375
DEL NORTE$548,250
EL DORADO$598,000
FRESNO$548,250
GLENN$548,250
HUMBOLDT$548,250
IMPERIAL$548,250
INYO$548,250
KERN$548,250
KINGS$548,250
LAKE$548,250
LASSEN$548,250
LOS ANGELES$822,375
MADERA$548,250
MARIN$822,375
MARIPOSA$548,250
MENDOCINO$548,250
MERCED$548,250
MODOC$548,250
MONO$548,250
MONTEREY$739,450
NAPA$816,500
NEVADA$548,250
ORANGE$822,375
PLACER$598,000
PLUMAS$548,250
RIVERSIDE$548,250
SACRAMENTO$598,000
SAN BENITO$822,375
SAN BERNARDINO$548,250
SAN DIEGO$753,250
SAN FRANCISCO$822,375
SAN JOAQUIN$548,250
SAN LUIS OBISPO$701,500
SAN MATEO$822,375
SANTA BARBARA$660,100
SANTA CLARA$822,375
SANTA CRUZ$822,375
SHASTA$548,250
SIERRA$548,250
SISKIYOU$548,250
SOLANO$550,850
SONOMA$707,250
STANISLAUS$548,250
SUTTER$548,250
TEHAMA$548,250
TRINITY$548,250
TULARE$548,250
TUOLUMNE$548,250
VENTURA$739,450
YOLO$598,000
YUBA$548,250

Another Year, Another Increase

The maximum mortgage amounts for conventional loans are determined by the Federal Housing Finance Agency (FHFA). This agency oversees Freddie Mac and Fannie Mae, the “government-sponsored enterprises” that purchase mortgage loans from lenders and sell them to investors.

Each year, officials from the FHFA review home-price trends for counties across the country and decide whether or not to increase loan limits. This year, they determined that home prices across the country have risen enough to warrant higher loan limits for 2021.

A Response to Rising Home Prices

In most California cities, home values rose steadily throughout 2020. This might seem counterintuitive, given the ongoing coronavirus pandemic and economic downturn. But the real estate market has been the one bright spot in the broader economy.

Record-low mortgage rates and strong demand from buyers have boosted home prices at a time when you might expect the opposite trend. As a result of these trends, California will have higher conforming loan limits in 2021.

According to the real estate data company Zillow, the median home value in California rose by around 6.3% over the past year or so. The company’s analysts are predicting even bigger gains for 2021.

In November, the company stated: “California home values have gone up 6.3% over the past year and Zillow predicts they will rise 8.3% in the next year.”

A recent report from the California Association of Realtors showed even bigger gains, by analyzing a different metric. According to their November 2020 report, the median sold price for existing single-family homes across the state rose by a whopping 17.5% from October 2019 to October 2020.

Given these trends, it’s not surprising to see higher conforming loan limits for California counties in 2021.