Each year, federal housing agencies adjust loan limits to reflect changes in home prices, and for 2026 both FHA and conforming (conventional) loan limits have increased across California. These updates are especially meaningful for Monterey County, where rising home values have pushed more buyers toward the upper end of financing thresholds. The new limits expand buying power, help more borrowers avoid jumbo loans, and create additional opportunities for first‑time and moderate‑income buyers.
For 2026, the Federal Housing Finance Agency (FHFA) raised the baseline conforming loan limit for a one‑unit home to $832,750, with high‑cost areas capped at $1,249,125. Monterey County qualifies as a high‑cost area, and its new one‑unit conforming limit is $994,750, with higher limits available for two‑, three‑, and four‑unit properties.
These higher limits matter because they give buyers more room to finance a home without moving into jumbo loan categories, which typically require larger down payments and more stringent credit standards. Conforming loans allow down payments as low as 3% for eligible buyers, and even high‑balance conforming loans in counties like Monterey still permit low down‑payment options with competitive interest rates. FHA’s 3.5% down‑payment requirement remains a lifeline for buyers who need more flexible credit guidelines or who are entering the market for the first time.
Overall, the 2026 increases make it easier for California buyers—and especially Monterey County buyers—to access affordable financing, stay competitive in a rising‑price environment, and choose from a wider range of homes without facing the hurdles of jumbo financing. As always, buyers should review their county’s specific limits and consult with a trusted loan officer to understand which loan type best fits their financial goals.
Sources: Federal Housing Finance Agency (FHFA), U.S. Department of Housing and Urban Development (HUD).
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