The conforming loan limit
for most of the U.S. will, quite predictably, move higher on January 1. The Federal Housing Finance Agency announced
on Tuesday that the maximum origination balance for loans purchased or acquired
by the GSEs Fannie Mae and Freddie Mac during 2020 will increase to
$510,400. The conforming limit for 2019
is $484,350.
In areas where the median
home value is 115 percent of the new baseline loan limit the conforming limit
is higher than that baseline but cannot exceed 150 percent of it. That calculation caps the loan limit for
these "high cost" areas at $765,600, or 150 percent of $510,400. The high cost limit this year is $726,525. Special statutory provisions establish different loan limit
calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. For 2020
the limit in these areas is the same as for the U.S. as a whole, $765,600 for
one-unit properties.
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 estimated the
annual gain in home prices over the previous four quarters at an average of
5.38 percent. That percentage is
reflected in the new baseline limit. 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.
There are higher
limits for properties that contain two, three, or four units. The baseline limits for multi-unit properties
range from $653,550 to $981,700. A link
to county-by-county list of limits by property size is available here.
FHA and VA
loan limits typically are identical to those issued for Fannie Mae and Freddie
Mac but have not yet been announced.