2021 Will See A Conforming Loan Limit Rise

The new year will bring a change in the maximum baseline conforming loan limits for mortgages obtained by Fannie Mae and Freddie Mac. According to the announcement made by the Federal Housing Finance Agency (FHFA) the baseline will increase from $510,400 to $548,250.

The FHFA adjusted the loan limit by 7.42% due to the increase in the average U.S. home value. The value has increased between the last quarter in 2019 and 2020. In higher-cost areas, the new ceiling loan limit will be $822,375 up from the current limit of $765,600. The list of 2021 maximum conforming loan limits for every U.S. county and county-equivalent areas can be found here.

The baseline limit is required by Fannie Mae and Freddie Mac to be adjusted every year to keep up with the U.S. average home price and is defined by the Housing and Economic Recovery Act (HERA). Since the average price varies by the area they also defined “high-cost area” limits. HERA defines these areas in which 115 percent of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit.

This is good news for the U.S. housing market. In fact, the maximum conforming loan limit will be higher in 2021 in all but 18 counties or county-equivalents in the U.S.

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