The Federal Housing Finance Agency
(FHFA) has released the new conforming loan limits which will be in place next
year for mortgages acquired by the GSEs Fannie Mae and Freddie Mac. In
most of the U.S., the 2021 maximum conforming loan limit (CLL) for one-unit
properties will be $548,250, an increase from $510,400 in 2020.
The Housing and Economic Recovery
Act (HERA) 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 as reported
by FHFA’s House Price Index (HPI). According
to the seasonally adjusted, expanded data HPI published last week, house prices
increased 7.42 percent, on average, between the third quarters of 2019 and
2020. Therefore, the baseline maximum CLL will increase by the same
The maximum loan limit in some areas is considered high cost, that is where 115 percent of the local median home
value is higher than the baseline CLL, is also established by HERA. It uses a
multiple of the area median home value but sets a “ceiling” at 150 percent of
the baseline loan limit. The new ceiling
loan limit for one-unit properties in most high-cost areas will be $822,375 or
150 percent of $548,250. There are special provisions in HERA that
sometimes provide different limits for Alaska, Hawaii, Guam, and the U.S.
Virgin Islands. However, in 2021 those areas will also have the $822,373
As a result of generally rising home
values, the increase in the baseline loan limit, and the increase in the
ceiling loan limit, FHFA says the maximum CLL will increase for next year in
all but 18 U.S counties or county equivalents. will be higher in 2021 in all
but 18 counties or county equivalents in the U.S.
A list of the 2021 maximum loan
limits for areas of the U.S. and for multiple unit properties is available here.