The Federal Housing Finance Agency (FHFA) has increased the maximum conforming loan limits (CLL) for mortgages to be acquired by Fannie Mae and Freddie Mac (the Enterprises). This maximum CLL for 2021 in most of the U.S. for one-unit properties will be $548,250, an increase of $37,850 from 2020, or 7.42 percent.
The increase was determined by the percentage increase in housing prices between the third quarters of 2019 and 2020, based on the FHFA’s house price index. The Housing and Economic Recovery Act (HERA) requires the baseline maximum CLL be adjusted for the Enterprises to reflect the change in the average price of a home in the U.S., the agency said in a release.
Certain areas of the country will have a different maximum CLL. Specifically, those where 115 percent of the local median home value exceeds the baseline CLL.
“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,” the FHFA said. “Median home values generally increased in high-cost areas in 2020, driving up the maximum loan limits in many areas.”
In most high-cost areas, the new ceiling loan limit for one-unit properties will be $822,375.
“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 CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S.,” the agency said.