Conforming Loan Limits in Southern California Rise for 2026

The Federal Housing Finance Agency (FHFA) has announced a modest increase in conforming loan limits for Southern California, set to take effect on January 1, 2026. The new conforming loan limit for a single-unit property will rise by 3.26%, amounting to an increase of $26,250. This adjustment raises the maximum conforming mortgage size to $832,750 from the previous year’s limit of $806,500.

Although the change is officially effective at the start of the new year, many lenders will begin implementing the updated loan sizes immediately, allowing them to hold the loans until the FHFA’s deadline for selling them to government-sponsored entities like Fannie Mae and Freddie Mac. This increase applies to the counties of Los Angeles, Orange, San Diego, Riverside, and San Bernardino.

Smaller Annual Increase Compared to Previous Years

The 3.26% increase is notably smaller than the adjustments seen in recent years. For instance, the increase from 2024 to 2025 was 5.2%, while the previous year saw a rise of 5.5%, and the year before that experienced a significant jump of 12.2%. The FHFA adjusts these loan limits based on changes in the average U.S. home price, specifically comparing the third quarter of 2024 to that of 2025, as mandated by the Housing and Economic Recovery Act.

In high-cost areas like Los Angeles, Orange, and San Diego counties, the FHFA also establishes higher loan limits, known as high-balance or jumbo mortgages. For 2026, the high-balance limit for Los Angeles and Orange counties will reach $1,249,125, while in San Diego County, the limit will be set at $1,104,000.

Income Requirements and Loan Types

For buyers looking to acquire homes at or near the new conforming loan limit, the financial requirements are substantial. A well-qualified borrower would need to earn approximately $159,000 annually to purchase a $1,041,000 home with a 20% down payment, maxing out at the new conforming loan amount. This scenario assumes no additional debt and a 5.625% fixed-rate mortgage over 30 years, resulting in a total monthly payment of about $5,961.

For those seeking to buy a property priced at $1,561,400, the required annual income would escalate to around $243,500, again assuming a 20% down payment with a maximum high-balance loan amount. The estimated monthly payment in this case would be approximately $9,132, based on a 5.99% interest rate.

The new limits also extend to multi-unit properties. For two-unit properties, the maximum loan amount will be set at $1,066,250, while for three-units, it is $1,288,800, and for four-unit properties, the limit reaches $1,601,750. In Los Angeles and Orange counties, the high-balance limits for two, three, and four-unit properties will be $1,599,375, $1,933,200, and $2,402,625, respectively. San Diego County will have slightly lower limits for similar properties.

It is important to note that loans backed by the Veterans Administration are not subject to these FHFA limits, as outlined by the Blue Water Navy Vietnam Veterans Act of 2019. Additionally, the Federal Housing Administration (FHA) has yet to announce its own limits for 2026, though historically, these limits tend to align with conforming and high-balance limits in Los Angeles and Orange counties.

The significance of the conforming loan limits is underscored by the implicit government guarantee on loans that fall within these maximum thresholds. This government backing typically results in lower mortgage rates compared to non-conforming loans, contingent on meeting the underwriting criteria established by Fannie Mae and Freddie Mac. Exceeding these limits generally necessitates obtaining a jumbo loan, which may have competitive pricing but often comes with stricter qualifying standards.

As for current mortgage rates, the average 30-year fixed-rate mortgage stands at 6.23%, a slight decrease of 3 basis points from the previous week. The average 15-year fixed-rate mortgage is currently at 5.51%, also down 3 basis points from last week. The Mortgage Bankers Association reported a modest 0.2% increase in mortgage applications compared to the previous week.

In summary, borrowers looking to secure a conforming loan of $832,750 will find that their payments have increased compared to last year, with the current average payment being approximately $317 higher than in the previous year, totaling around $5,117.

As the market evolves, prospective borrowers should remain informed about their options, including various loan types and the current interest rates offered by lenders.