The Federal Housing Finance Agency announced last week that it is raising the conforming loan limits for Fannie Mae and Freddie Mac to more than $510,000.
In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019.
What this means is that many buyers who were unable to qualify for $500,000 mortgages due to “jumbo loan” restrictions can now re-visit an application!
Data from FHFA shows that home prices increased by 5.38% on average between the third quarter of 2018 and the third quarter of 2019. So, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.
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 2020 in all but 43 counties or county equivalents in the U.S.
Find out more from Housingwire here…
Conforming Loans – what are they?
A conforming loan gets its name because it meets or “conforms” to specific guidelines set by the two largest government-controlled loan entities — Fannie Mae and Freddie Mac. Loans that are greater than $510,400 in general are considered “jumbo” mortgages and are not controlled by Fannie Mae or Freddie Mac.
This marks the fourth straight year that the FHFA has increased the conforming loan limits after not increasing them for an entire decade from 2006 to 2016.
In 2016, the FHFA increased the Fannie and Freddie conforming loan limit for the first time in 10 years, and since then, the loan limit has gone up by $93,400.
Back in 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, the next year, the FHFA raised the loan limits from $424,100 to $453,100 for 2018. And in 2018, the FHFA increased the loan limit from $453,100 to $484,350 for 2019.
Median home values generally increased in high-cost areas in 2019, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 — or 150% of $510,400.
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Please do reach out to me and find out what the conforming loan limit is for your neighborhood!