The annual large independent mortgage banker race to raise their internal conforming loan limit ahead of the formal announcement in November has begun.

These firms, a group which includes both publicly traded and private companies, have the financial wherewithal that their smaller sized brethren don't, by being able to put these loans on their balance sheet.

Rocket became the first of the group of five to announce this year's change, on Sept. 10.

For one-unit properties, it will approve loans up to $845,000 as a conforming mortgage if the property is in the lower 48 states. It is approximately 1.5% higher than the current Federal Housing Finance Agency-set limit of $832,750.

Alaska and Hawaii have higher limits under federal law; Rocket will now approve loans to almost $1.27 million for single unit houses in those states.

For two-unit homes, the lower 48 limit is $1.08 million; three units have a limit of nearly $1.31 million, while for four units Rocket has a $1.625 million limit in place.

Current conforming versus jumbo pricing reveals an inversion

While conforming mortgage rates are normally lower than jumbo, right now, two sources are showing an inversion. The Mortgage Bankers Association Weekly Application Survey for the period ended Sept. 4, has the conforming 30-year FRM at 6.86%, and the jumbo at 6.74%; versus the prior week, the conforming rose 6 basis points and the jumbo dropped by 2 basis points.

According to the Optimal Blue tracker, since late June pricing on conforming and jumbo mortgages has swapped several times, with the latest inversion starting on Sept. 4. For Sept. 9, conforming loans were priced on average at 6.805%, while jumbo was at 6.791%.

But conforming loan underwriting allows for more favorable borrower qualification, said Kyle Schoenmaker, Rocket Pro senior vice president of sales.

Much of it also depends on the current secondary market appetite for jumbo mortgages. "It is an advantage for folks to be able to get into a conforming loan limit most of the time," Schoenmaker said.

The higher limits are available for Rocket's retail, wholesale and non-delegated correspondent customers.

Why increase loan limits early?

"Early deployment has been a strategy of ours over the past couple of years, and it's something where we are trying to give our partners and our clients the best advantage in a really challenging market," Schoenmaker said.

But it is also introducing these widened guidelines at a time when the capital markets side is dealing with a secondary market where pricing has come under pressure as the 10-year Treasury yield hits levels not seen in three years.

"We factor in everything when we make these decisions," Schoenmaker said. "Our capital markets team is seasoned, they're tenured, and they make the decisions. We have the reputation of delivering on solutions that serve our partners and our clients, so we take all of those factors into consideration."

Once Jan. 1, 2027 rolls around and the updated conforming loan limits are enacted, they and anyone else are then able to sell these mortgages to Fannie Mae and Freddie Mac.

The annual increase in the top loan amount at which Fannie Mae and Freddie Mac will purchase a mortgage during a given year is in a formula set by the Housing and Economic Recovery Act. The FHFA's own house price index for the third quarter sets the base for the percentage increase in those limits.

Which other IMBs raise limits early?

In 2025, United Wholesale Mortgage led the parade when it announced on Sept. 17 of that year. Rocket waited until last October, but broke ranks offering an $825,500 single family limit, while the others were at $819,000.

The other lenders who raised limits early in prior years in addition to the Detroit-area rivals were Pennymac, CrossCountry and Rate. National Mortgage News reached out to the other four for comment.

Both Rate and CrossCountry confirmed they are also raising their conforming limits to the $845,000 level for single unit properties.

Rate will be making its increased conforming loan limit available on Sept. 14, a statement from Jeremy Collett, chief capital markets officer.

"Homebuyers continue to face affordability pressures from both elevated home prices and sustained higher interest rates," Collett said. "That's why we're committed to leveraging the full breadth of Rate's platform to help customers identify the most competitive financing solution available."

These programs give borrowers additional financing flexibility at a time when they could use every advantage, he said, adding "It's another example of how Rate is using its scale, product breadth, and execution capabilities to help customers navigate challenging affordability conditions and achieve homeownership."

CrossCountry, which recently closed on its purchase of Two Harbors Investment following a heated battle with UWM, called its upsize the Early Bird Program.

"The housing market doesn't wait for annual loan-limit updates, and neither should homebuyers," said Brian Clark, director of product and pricing at CrossCountry Mortgage, in a press release. "Through our 2027 Early Bird Loan Limits, we're giving borrowers earlier access to higher conventional loan amounts — creating more purchasing power, greater flexibility and added confidence as they search for the right home."

The risk for independent mortgage banks is that the conforming limits are not increased to the level expected; this has not happened since HERA went into law, however. This is not an issue for depositories, which have the ability to portfolio non-conforming products.