FHFA Increases Conforming Loan Limits

  • November 29, 2017

Last week, the Federal Housing Finance Agency (FHFA) increased the maximum conforming loan limits for the second year in a row.  This is only the second time since 2006 the FHFA has increased the maximum conforming loan limit.  In 2018, the limit will increase from $424,100 to $453,100 for most states, and from $453,100 to $679,650 in high-cost areas including Alaska, Hawaii, Guam, and the US Virgin Islands.  

Conforming loan limits for loans backed by Fannie Mae and Freddie Mac were established as part of the Housing and Economic Recovery Act (HERA) of 2008.  During economic recovery, loan limits remained at a level of $417,000 for a decade.  In 2017, limits were raised for the first time.  The conforming loan limits are based on changes in home price appreciation. According to the FHFA house price index, the average home price increased 6.8% from 2016 to 2017 in most states and 150% in high-cost areas including Alaska, Hawaii, Guam, and the US Virgin Islands. 

The housing industry has faced rapid home price appreciation for much of last year due to limited available inventory.  With fewer homes for sale, and construction not meeting the demand, a steady flow of buyers is competing over the same properties.   The recent increase in loan limits will improve access to borrowers buying higher-priced properties. 


Sources: FHFA, HousingWire, Mortgage News Daily

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Michael Diaz

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