Loan limits for Fannie Mae and Freddie Mac will jump to more than half a million dollars in 2020, the Federal Housing Finance Agency has announced.
According to the FHFA, the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac will be $510,400 in most of the US. That’s up from $484,350 in 2019.
The Housing and Economic Recovery Act (HERA) requires that baseline conforming loan limits be adjusted each year to reflect the change in average home process. According to the FHFA’s seasonally adjusted House Price Index (HPI), US home prices rose 5.38% on average between Q3 2018 and Q3 2019.
“Therefore, the baseline maximum conforming loan limit in 2020 will increase by the same percentage,” the agency said.
Loan limits will be higher in high-cost areas – defined as areas in which 115% of the local median home value exceeds the baseline conforming loan limit. Under HERA, the maximum loan limit in high-cost areas is established as a multiple of the area median home value, with a ceiling of 150% of the baseline loan limit. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 in 2020 – or 150% of $510,400.
As a result of rising home values, the maximum conforming loan limit will rise in 2020 in all but 43 counties in the US, according to the FHFA.