FHFA Increases New Conforming Loan Limits For Fannie Mae and Freddie Mac for 2021

Real Estate In-Depth | November 25, 2020

WASHINGTON—The Federal Housing Finance Agency announced on Nov. 24 the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2021. For high-cost areas in which 115% of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit.

Five counties in the HGAR/OneKey MLs market area qualify as high cost areas. Median home values generally increased in high-cost areas in 2020, 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 $822,375—or 150% of $548,250.

The new loan limits in the HGAR/OneKey MLS market area are:

Bronx County, one-unit limit: $822,375; two-unit limit: $1,053,000;
Westchester County, one-unit limit: $822,375; two-unit limit: $1,053,000;
Rockland County, one-unit limit: $822,375; two-unit limit: $1,053,000;
Putnam County, one-unit limit: $822,375; two-unit limit: $1,053,000;
New York County, one-unit limit: $822,375; two-unit limit: $1,053,000;
Orange County, one-unit limit: $726,525; two-unit limit: $930,000;
Sullivan County, one-unit limit: $548,250; two-unit limit: $702,000.

The Housing and Economic Recovery Act requires that the baseline CLL be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. The FHFA published its third quarter 2020 FHFA House Price Index report, which includes estimates for the increase in the average U.S. home value over the last four quarters. According to the seasonally adjusted, expanded-data FHFA HPI, house prices increased 7.42%, on average, between the third quarters of 2019 and 2020. Therefore, the baseline maximum CLL it in 2021 will increase by the same percentage.

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% of the baseline loan limit. In most of the U.S., the 2021 maximum conforming loan limit for one-unit properties will be $548,250, an increase from $510,400 in 2020.

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $822,375 for one-unit properties.

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 CLL will be higher in 2021 in all but 18 counties or county equivalents in the U.S, the FHFA stated.