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FHFA: Mortgage Loan Limits Rise to over $510k

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Today, the FHFA (Federal Housing Finance Agency) announced the new conforming loan limits for Fannie Mae and Freddie Mac. The result is similar to the past four years: they’re on the rise, reaching a limit of $510,400 for most of the states on the US. This is a big increase from 2019’s $484,350 loan limit, and it gives us a glimpse at how our economy is actually growing and how our home values keep changing, this time for the best.


The loan limit has been increasing for the past four years (by almost $100,000). This all started when the FHFA increased the loan limit for the first time in 2016 from $417,000 to $424,100, the limit kept rising until today, reaching its highest value at $510,400.


Conforming loan limits are dictated by 2008’s HERA (Housing and Economic Recovery Act). This act establishes the base loan limit and stops it from rising until home prices start to show pre-decline levels. But home prices have increased by an average of 5.38% between 2018 and today, that’s why the baseline maximum has increased alongside this percentage.


Loan limits vary from state to state. Places like Alaska and Hawaii have a limit of $765,600 for one-unit properties. 


This is great news for a lot of borrowers. You can put less money down or buy a bigger house, and still stay within the limit without getting a Jumbo loan or a high balance loan (which usually has higher rates and stricter guidelines). VA loans are a different story: There will be no more loan limit for them, starting in 2020. This means you could buy a $1,000,000 property at 0% down. 


This is pretty amazing! It shows you the healthy state of the country's economy as our home values keep rising.



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