FHFA Announces 7% Increase in GSE Conforming Loan Limits

The Federal Housing Finance Agency yesterday announced a nearly 7 percent increase in conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019.

The increases (https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Maximum-Conforming-Loan-Limits-for-2019.aspx), the third in as many years, brings the 2019 maximum conforming loan limit for one-unit properties to $484,350, up from $453,100 in 2018.

“The increase in conforming loan limits results from continued strengthening in home prices and a strong demand for housing coupled with constraints on supply,” said Mortgage Bankers Association President and CEO Robert Broeksmit, CMB.

FHFA noted, “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 will be higher in 2019 in all but 47 counties or county equivalents in the U.S.”

The Housing and Economic Recovery Act requires the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average U.S. home price. Earlier today, FHFA published its third quarter 2018 House Price Index report, which includes estimates for the increase in the average U.S. home value over the past four quarters. The HPI noted home prices increased 6.9 percent, on average, between the third quarters of 2017 and 2018, resulting in the conforming loan limit increase by the same percentage for 2019.

FHFA also announced adjustments for “high-cost areas,” defined as those areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525, or 150 percent of $484,350.

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 $726,525 for one-unit properties.

A list of 2019 maximum loan limits for all counties and county-equivalent areas in the U.S. can be accessed at https://www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-Limits/FullCountyLoanLimitList2019_HERA-BASED_FINAL_FLAT.pdf.