The Federal Housing Finance Agency (FHFA) recently announced plans to boost conforming loan limits in 2018 in response to rising property values across the US. The FHFA will increase the baseline for single-unit home mortgages acquired by Fannie Mae and Freddie Mac from $424,100 to $453,100 in most of the country.
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. According to FHFA’s seasonally adjusted, expanded-data House Price Index (HPI), house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017. Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage.
High-cost area limits
According to the FHFA release, “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 2017, 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 $679,650 — or 150 percent of $453,100.
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 2018 in all but 71 counties or county equivalents in the U.S.”
Questions about the 2018 conforming loan limits can be addressed to LoanLimitQuestions@fhfa.gov.