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Fannie and Freddie Loan Limits Increase

Updated: Apr 1, 2019

After 10 years of not increasing the maximum conforming loan limits on mortgages to be acquired by Fannie Mae and Freddie Mac, the Federal Housing Finance Agency has now increased the conforming loan limit for the third straight year.


On November 27, 2018, the FHFA announced that it was increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part of the U.S.


According to the FHFA, the conforming loan limits will rise from a total of $453,100 for 2018 to $484,350 for 2019. That’s an increase of 6.9% from last year’s loan limit to this year’s.

In 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, in 2017, the FHFA raised the loan limits from $424,100 to $453,100 for 2018.

The 2019 loan limit was then increased from $453,100 to $484,350.


The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels.


But, as the FHFA reported in November 2018, home prices are still on the rise, which necessitated a third straight yearly increase in the conforming loan limit. The FHFA’s third quarter 2018 House Price Index report, which included estimates for the increase in the average U.S. home value over the last four quarters, showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018. 


Therefore, the maximum conforming loan limit in 2019 increased by the same percentage to $484,350.

In what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit, loan limits also increased. Under the Housing and Economic Recovery Act (HERA), the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area’s median home value, while setting a "ceiling" on that limit of 150% of the baseline loan limit.


According to the FHFA, median home values “generally increased” in high-cost areas as well in 2018, which prompted an increase in maximum loan limits in many areas.  The new ceiling loan limit for one-unit properties in most high-cost areas is $726,525, which is 150% of $484,350.

Per the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In those areas, the baseline loan limit will be $726,525 for one-unit properties.


“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.,” the FHFA said.


Blog Credit – housingwire.com

VIEW THE 2019 FULL COUNTY LIMIT LIST [HERE]


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