FHFAs New Conforming Loan Limits For 2019

Dated: 11/28/2018

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On Tuesday, The Federal Housing Finance Agency announced that it would be increasing the loan limits on the mortgages to be acquired by Freddie Mac and Fannie Mae for a third consecutive year. FHFA published its third quarter 2018 House Price Index (HPI) report recently. This report includes estimates for the increase in the average U.S. home value over the last four quarters. In most U.S. states, the maximum conforming loan limit for one-unit properties in 2019 will be $484,350 - an increase from the 2018 figure of $453,100. This limit is a 6.9% hike from the year’s loan limit.

The announcement marks the third time FHFA has increased the baseline loan limit since 2006. This trend began when FHFA increased the conforming loan limits from $417,000 to $424,100 in 2016. Then, during last year the FHFA raised the loan limits from $424,100 to $453,100 for 2018. Now, it has announced an increased loan limit for 2019 as well.

Here is a little background on the matter.

The Housing and Economic Recovery Act (HERA) of 2008 requires the baseline loan limit to be adjusted each year for Fannie Mae and Freddie Mac in order to reflect the ongoing changes in U.S. home prices. Later, According to HERA, if there has been a period of home price decline, the baseline loan limit cannot rise again until home prices return to pre-decline levels.

Now, think about this. The FHFA establishes the maximum loan limit in such areas as a multiple of the area median home value while setting a ‘ceiling’ on that limit to 150 percent of the baseline loan limit. So with home value generally increasing in 2018 all over the country, this resulted in driving up the maximum loan limits in areas with increasing home prices. For 2019, the new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525 0r 150 percent of $484,350.

Consequently, taking into account rising home values as well as the trend towards an increase in the baseline loan limit and the ceiling loan limit;  the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.

For a county-by-county breakdown of the 2019 conforming loan limits, click here.

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