The Federal Housing Finance Agency announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.
For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to move higher this year, the FHFA has raised limits again for 2018.
The Housing and Economic Recovery Act requires the conforming loan limit of the government-sponsored entities to be adjusted each year to reflect any changes in the average U.S. home price. Average home values have risen by 6.8 percent since the third quarter of 2016, according to the FHFA’s latest House Price Index. The maximum conforming loan limit will now rise by 6.8 percent too.
Home buyers are not eligible for the baseline limit in places where the local median home value is more than 115 percent of that limit. HERA permits higher limits in some locales, but the highest is 150 percent of the baseline limit. High-cost areas may see a baseline, therefore, of up to $679,650.
The FHFA provides the following interactive chart to check conforming loan limits in your area.