The Federal Housing Finance Agency (FHFA) begins the implementation of the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2020. 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.
Conforming Loan Limits Baseline Limit
The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. Earlier today, FHFA published its third quarter 2019 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 5.38 percent, on average, between the third quarters of 2018 and 2019. Therefore, the baseline maximum conforming loan limit in 2020 will increase by the same percentage.
High-cost Area Limits
For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value while setting a “ceiling” on that limit of 150 percent of the baseline loan limit. 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 percent of $510,400.
Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $765,600 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 2020 in all but 43 counties or county equivalents in the U.S.
You can email questions about the 2020 conforming loan limits to LoanLimitQuestions@fhfa.gov. Also, more information is available at https://www.fhfa.gov/CLLs.
- The list of the 2020 maximum loan limits for all counties and county-equivalent areas in the U.S. click here.
- For a map showing the 2020 maximum loan limits across the U.S. click here.
- For a detailed description of the methodology used to determine the maximum loan limits in accordance with HERA, click here.
Source: FHFHA Website