The Federal Housing Finance Agency announced on Tuesday that it would be increasing the conforming loan limits on mortgages to be acquired by Fannie Mae and Freddie Mac for the third consecutive year.
In most of the United 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. For areas that generally feature higher-than-average home values, defined as places where median home values exceed 115% of the baseline, FHFA has set a higher maximum figure of $726,525 for 2019, up from 2018’s figure of $679,650.
FHFA does not have authority over the lending limits tied to reverse mortgages; however, the Federal Housing Administration (FHA) has typically aligned them with the new Fannie and Freddie limits in previous years. Last year, for instance, the loan limit handed down by the Department of Housing and Urban Development for federally backed reverse mortgages for 2018 was $679,650, matching FHFA’s aforementioned high-cost limit for that same year.
The Housing and Economic Recovery Act (HERA) of 2008 dictates that the baseline conforming loan limit must be adjusted annually for Fannie and Freddie in order to reflect changes in the average U.S. home price. According to FHFA’s third quarter 2018 Housing Price Index (HPI) report, also published this week, home prices increased by an average of 6.9% between Q3 2017 and Q3 2018. Because of that increase, the baseline conforming loan limit in 2019 will be raised by the same percentage.
You can find FHFA’s official announcement of the new loan limits by clicking here.
Written by Chris Clow