Great news for homeowners and homebuyers!
The Federal Housing Finance Agency (FHFA) today announced the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. In most of the U.S., the 2021 maximum conforming loan limit for one-unit properties will increase from $510,400 to $548,250.
These loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. Those limits will increase from $765,600 to $822,375.
The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act (HERA) of 2008, which establishes baseline loan limits. FHFA just published its third quarter 2020 FHFA House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters. According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 7.42 percent, on average, between the third quarters of 2019 and 2020. Therefore, the baseline maximum conforming loan limit in 2021 will increase by the same percentage.
Those limits above are for one-unit properties. Two-to four-unit properties have also increased.
This is great news for homeowners and homebuyers as it’s a true economic indicator that the housing market continues to be robust. Additionally, conforming loans are ideal for many buyers as it allows for low down payments.
If you have questions about what this change could mean for you, please reach out to an HFG Licensed Mortgage Professional near you.