FHFA Announces Increased Loan Limits for Freddie and Fannie in 2018

The Federal Housing Finance Agency (FHFA) has announced that it will increase the conforming loan limits for mortgages that can be sold to Fannie Mae and Freddie Mac in 2018. The 2018 maximum conforming loan limit for single-family homes will be $453,100, up from $424,100 in 2017.

According to the FHFA, home prices have increased 6.8 percent from the third quarter of 2016 to the third quarter of 2017. The conforming loan limit is growing by this same percentage because the Housing and Economic Recovery Act (HERA) mandates that 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.” This is just the second time the FHFA has increased the loan limit since 2006.

For high-cost areas—where 115 percent of local median home values exceeds the baseline conforming loan limit—HERA requires that the maximum loan limit be a multiple of the area’s median home value and establishes a “ceiling” on that limit of 150 percent of the baseline loan limit. The new loan limit for single-family homes in these areas will be $679,650.

The FHFA also notes that “special statutory provisions” dictate different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. Here, the baseline loan limit will be $679,650 for single-family homes, although loan limits may exceed this figure in specific areas.

These conforming loan limits delineate the size of mortgages Fannie Mae and Freddie Mac can buy or guarantee. The increase is good news for hopeful homebuyers around the country who can now utilize higher purchasing power to counterbalance rising U.S. home prices.

Consumers can direct questions about the new conforming loan limits to LoanLimitQuestions@fhfa.gov.

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