Conforming Loan Limits to Top $500K in 2020
WASHINGTON – The Federal Housing Finance Agency (FHFA) announced an increase in maximum conforming loan limits starting in January 2020. The change affects more than half of all U.S. loans that are later acquired by Fannie Mae and Freddie Mac in 2020.
In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400 – an increase from $484,350 in 2019. However, the loan limits are even more in selected higher-cost U.S. areas, and those loans can be conforming clear up to $765,600.
Under the Housing and Economic Recovery Act (HERA), baseline conforming limits for loans that Fannie Mae and Freddie Mac can purchase must be adjusted each year to reflect changes in the average U.S. home price. Based on FHFA’s third quarter 2019 FHFA House Price Index, house prices increased 5.38%, on average, between the third quarters of 2018 and 2019. Therefore, the baseline maximum conforming loan limit in 2020 increases by the same percentage.
The higher loan limits applies only in areas where 115% of the local median home value exceeds the baseline conforming loan limit. However, the cap can vary by area.
HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a ceiling of 150 percent of the baseline loan limit. Median home values generally increased in high-cost areas in 2019, driving up many maximum loan limits. The new ceiling loan limit for one-unit properties in most high-cost areas will be $765,600 – 150 percent of $510,400.
Special statutory provisions also establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $765,600 for one-unit properties.
FHFA posts a list online of loan limits by county and map:
- 2020 maximum loan limits for all counties and county-equivalent areas
- Map showing 2020 maximum loan limits
- Description of the methodology used to determine maximum loan limits in accordance with HERA.
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