FHFA Increases Conforming Loan Limits for Fannie, Freddie in 2021

The Federal Housing Finance Agency (FHFA) announced on Wednesday that it would be increasing the conforming loan limits on mortgages to be acquired by Fannie Mae and Freddie Mac for the fifth consecutive year.

In most of the United States, the maximum conforming loan limit for one-unit properties in 2021 will be $548,250, an increase from $510,400 in 2020. 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 $822,375 for 2021, up from 2020’s figure of $765,600.

“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 (CLL) will be higher in 2021 in all but 18 counties or county equivalents in the U.S.,” FHFA said in its announcement of the new loan limits.


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, the loan limit handed down by the Department of Housing and Urban Development (HUD) for federally backed reverse mortgages in 2020 was $765,600, 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 2019 Housing Price Index (HPI) report published on Tuesday, home prices increased by an average of 7.42% between the third quarters of 2019 and 2020. Because of this, the baseline maximum conforming loan limit in 2021 will increase by the same percentage, FHFA said.

You can find FHFA’s official announcement of the new loan limits by clicking here.

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  • In its recommendations to Congress, HUD states the following on page 87 of its annual report to Congress on the status of FHA’s MMIF for fiscal 2020:

    “Changes to Home Equity Conversion Mortgage Loan Limits

    Similar to the forward mortgage program, the statutory loan limit for the Home Equity Conversion Mortgage (HECM) program continues to grow based on the calculation of loan limits for the highest cost areas of the country. This calculation fails to reflect variation in local housing markets and regional economies across the United States. Currently, the HECM program utilizes one nationwide loan limit of $726,525 (for calendar year 2019), which significantly exceeds the forward mortgage loan limits for much of the country. Given the HECM program’s historic volatility and contributions to outsized losses to the MMI Fund, the HECM program poses a greater risk based on loan limits than the forward program and has the potential to negatively impact FHA’s ability to meet its statutory goals for its Single Family programs. FHA questions whether the mission of FHA is being served by the current HECM loan limits.”

    Based on the foregoing will HUD increase the HECM national lending loan limit for 2021 to over $800,000, especially in light HUD questioning whether the increase for 2019 is serving the FHA mission?

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