Key Takeaways
- High-cost areas allow for higher mortgage loan limits.
- These areas have home values above the national average.
- Loan limits increase based on local median home prices.
- Higher limits help buyers avoid jumbo loans and higher rates.
Article Summary
A high-cost area is a city, county, or parish where the median home value significantly exceeds the national average, leading to higher loan limits for mortgages.
High-Cost Area: Explained in Plain English
In the context of mortgages, high-cost areas are geographic regions where home values are significantly higher than the national average. The concept was legally established under the Housing and Economic Recovery Act (HERA) of 2008, and gives home buyers in those areas access to higher mortgage loan limits. Conventional mortgages and FHA mortgages use different loan limits.
For example, the current conforming mortgage loan limit is $806,500 for a one-unit home. In high-cost areas, the conforming loan limit ranges up to $1,209,750 .
The formula for identifying which areas are high-cost is straightforward. If a region's median home value exceeds 115% of the baseline mortgage loan limit, that area is designated as a high-cost area, and its local loan limits are adjusted upwards proportionally.
Without this adjustment, many first-time home buyers would have to use jumbo mortgages to buy their homes, often with stringent underwriting criteria and higher mortgage rates. Designating an area as high-cost makes homeownership more affordable and accessible to all. Use our home affordability calculator to see what you can afford in high-cost areas.
High-Cost Area: A Real World Example
Imagine a scenario where a first-time home buyer is eager to purchase a home in a well-known, high-cost area like San Francisco. They come across a home that, while relatively modestly priced for the Bay Area, still has a sale price significantly higher than what one would typically find in other parts of the country.
In most cities, the cost of the home would necessitate a jumbo loan, which often asks for large down payments and stricter credit qualifications. However, because the buyer is purchasing in a high-cost area, their starting loan size will fall within the special, increased mortgage loan limits specially designated for high-cost areas like this one.
Furthermore, because the mortgage remains within conforming mortgage loan limits, the buyer opts to use Fannie Mae's HomeReady mortgage, which allows for a 3 percent downpayment with reduced mortgage insurance costs, making the prospect of owning a home in an expensive market like San Francisco a realistic and achievable goal.
High-Cost Areas For 2026 Mortgage Loan Limits
The Federal Housing Finance Agency evaluates median home prices in every U.S. county each year, assigning the high-cost designation to qualified counties and metropolitan statistical areas.
The following counties were added to the high-cost area list for 2026:
- Fairfield County, Connecticut
- Grand County, Colorado
No counties were removed from the high-cost area list for 2026, but the following counties were removed in 2024 and remain on the standard conforming loan limit list today.
- Box Elder County, Utah
- Camas County, Idaho
- Davis County, Utah
- Dutchess County, New York
- El Dorado County, California
- Morgan County, Utah
- Orange County, New York
- Placer County, California
- Sacramento County, California
- Weber County, Utah
- Yolo County, California
Here is a complete high-cost areas by state, 2026:
Alaska
- Aleutians East Borough
- Aleutians West Census Area
- Anchorage Municipality
- Bethel Census Area
- Bristol Bay Borough
- Chugach Census Area
- Copper River Census Area
- Denali Borough
- Dillingham Census Area
- Fairbanks North Star Borough
- Haines Borough
- Hoonah-Angoon Census Area
- Juneau City and Borough
- Kenai Peninsula Borough
- Ketchikan Gateway Borough
- Kodiak Island Borough
- Kusilvak Census Area
- Lake and Peninsula Borough
- Matanuska-Susitna Borough
- Nome Census Area
- North Slope Borough
- Northwest Arctic Borough
- Petersburg Census Area
- Prince of Wales-Hyder Census Area
- Sitka City and Borough
- Skagway Municipality
- Southeast Fairbanks Census Area
- Wrangell City and Borough
- Yakutat City and Borough
- Yukon-Koyukuk Census Area
California
Colorado
Connecticut
District of Columbia
Florida
Idaho
Massachusetts
New Hampshire
New Jersey
New York
Pennsylvania
Tennessee
Virginia
Washington
West Virginia
Wyoming
Common Questions About High-Cost Areas
Get answers to frequently asked questions about high-cost areas, loan limits, and special mortgage programs.
What determines if an area is considered high-cost?
An area is considered high-cost if its median home values exceed 115% of the baseline conforming loan limit set by the FHFA. This designation is based on local housing market data and varies across regions.
How do high-cost mortgage loan limits differ from standard mortgage loan limits?
High-cost area loan limits are higher than those in standard areas. While the exact limits vary, they can reach 150% of the national conforming loan limit to accommodate higher property values in these regions.
Does living in a high-cost area affect mortgage interest rates?
The mortgage interest rates in high-cost areas are comparable to those in standard areas for conforming loans. However, avoiding a jumbo loan, which may have higher rates, can be a financial benefit.
Are there special mortgage programs available in high-cost areas?
Yes, programs like Fannie Mae's HomeReady mortgage and Freddie Mac's Home Possible mortgages cater to first-time home buyers in high-cost areas, offering low down payment options and favorable loan terms, making homeownership more accessible.
How do I see my local mortgage loan limit?
To find your local mortgage loan limit, use the Homebuyer.com interactive mortgage loan limit tool.
