December 19, 2019
The conforming loan limits for both Fannie Mae and Freddie Mac has recently been raised to more than $510, 000 by the Federal Housing Finance Agency. This is up from the 2019 level, which was $484,350 in most of the country.
This current raise will mark the fourth increase in just as many years. This is good news since those conforming loan limits had not been raised for ten years, from 2006 through 2015. It was finally in 2016 that the Federal Housing Finance Agency finally made the increase and, in the time, since then, the conforming loan limit has increased by a total of $93,400.
To give you a clearer picture, let’s see what the increases were for the conforming loan limits:
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2016: the limit went from $417,000 to $424,100
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2017: the limit went from $424,100 to $453,100
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2018: the limit went from $453,100 to $484,350
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2019: the limit went from $484,350 to the new limit of $510,000
All these conforming loan limits are determined by the Housing and Economic Recovery Act of 2008
According to the Federal Housing Finance Agency, the home prices between the third quarter of 2018 and the third quarter of this year increased by an average of 5.38%. The increase of the baseline maximum for conforming loan limits is always the same percentage as what the home price increase is.
There are some areas where the local median home value will exceed the baseline conforming loan limit and, in those cases, the maximum loan limit is always going to be higher than the baseline number. The Housing and Economic Recovery Act always establishes what the maximum loan limit will be for those areas and they also set a limit that makes it where the loan limit cannot be higher than 150% of the baseline.
You should also be aware that the baseline loan limit is different for places in Alaska, Hawaii, the US Virgin Islands, and Guam. The limit for those single unit properties is currently at $765,600.
The main thing that you need to take away from all this is that the maximum conforming loan limit will continue to raise in 2020. This will be from the continuously higher home values, as well as the increase in both the baseline loan limit and the higher loan limit in specific areas. This will not be true everywhere, but we can guarantee that you will see it in about 99% of the country.
And for a breakdown by county, click here.