Once a year, by formula: federal law (HERA) requires the FHFA to adjust the baseline conforming limit by the annual change in its own house price index. The process runs the same way no matter which party holds the White House. How the mechanism works: - The formula. Each year FHFA measures the change in its House Price Index from the third quarter of the prior year to the third quarter of the current year, and moves the baseline limit by that percentage. The new number is typically announced around Thanksgiving and takes effect the following year. - Prices up, limit up. Prices down, limit holds. The law provides no decrease. When national prices fell after 2006, the limit sat at $417,000 for a decade until cumulative gains passed the old peak. - High-cost areas get more room. In expensive counties the limit is 115% of the area's median home value, capped at 150% of the baseline. Loans between the baseline and that ceiling are what lenders call high-balance or super-conforming. FHA's own floor and ceiling are set as percentages of the conforming limit, so they move in lockstep. Because the dollar figures change every year, treat any specific number you read as a snapshot and check the current year's limits before you plan around them. Two practical notes. In high-cost markets like Southern California, high-balance financing is what ordinary first-time buyers use to purchase a normal home, because entry-level prices sit above the baseline. And high-balance loans without a large down payment can carry loan-level pricing adjustments that add a bit to the rate or cost, a policy lever that gets tweaked from time to time. Confirm the current limits and pricing add-ons for your county when you are ready to run numbers.