Mortgage

Pennymac, Finance of America are the latest lenders to raise conforming loan limits

In a tough market, lenders are being more aggressive than ever with conforming loan limits

Pennymac and Finance of America followed the tracks of Rocket Pro TPO and United Wholesale Mortgage in raising conforming loan limits ahead of the Federal Housing Finance Agency‘s (FHFA) decision to do so in November.

Pennymac will be increasing conventional loan limits to $715,000 across all channels, said the country’s third largest mortgage lender, according to Inside Mortgage Finance. For loans locked starting from September 13, Finance of America will be temporarily raising its conventional loan ceiling to $715,000 as well, the firm said Friday. Finance of America ranked 30th on IMF’s list of the biggest purchase mortgage lenders by volume.

“We continue to support our customers and partners by providing them with the best options in today’s market,” a spokesperson at Pennymac said. Official 2023 conforming loan limit changes will be determined by the FHFA announcement, the spokesperson added. 

Amid increasing competition in a shrinking origination environment, lenders are being aggressive in offering loans that currently are too large to qualify for Fannie Mae and Freddie Mac, but will in a few months. Those loans today would otherwise be jumbo loans, which require higher down payments and more documentation.

“This move allows borrowers in high-cost counties to access conforming loan pricing – and competitive mortgage rates – at higher loan amounts that would normally require them to take out a jumbo mortgage,” Finance of America said in a release. 

Rocket Pro TPO preemptively raised conforming loan limits this week to $715,000 in anticipation that the federal government will raise the maximum limit for one-unit properties of $647,200 by at least 10%. UWM made the same decision the next day.


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Pennymac is the country’s largest correspondent lender, through which it originates most of its purchase mortgages.

The Housing and Economic Recovery Act established in 2008 determined a formula for increasing conforming loan limits for Fannie Mae and Freddie Mac. The law mandated that the baseline could only rise after home prices returned to pre-recession levels. 

That condition was met eight years later in 2016 when the FHFA increased conforming limits for the first time in a decade. Last year, the FHFA raised conforming loan limits by 18% for one-unit properties and to $970,800 in high-cost areas as well as Alaska and Hawaii. Those loan limits are expected to exceed $1 million for 2023 when the FHFA makes its announcement in late November.

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