The coming year will see an increase at $484,350 in maximum conforming loan limit for one-unit properties compared to $453,100 in 2018. According to The Housing and Economic Recovery Act (HERA), the baseline for conforming loan requires an adjustment for Fannie Mae’s and Freddie Mac’s conforming loan limits. This practice helps adjust loan limits based on changes in the average U.S. home price.
FHFA’s seasonally adjusted, expanded-data HPI, revealed an average increase of 6.9 percent in house prices between the third quarters of 2017 and 2018, resulting in an increase along the same margins in the baseline maximum conforming loan limit in 2019.
The maximum loan limit will be higher than the baseline loan limit in high-cost area limits, where 115 percent of the local median home value exceeds the baseline conforming loan limit, FHFA stated. Median home values experienced a surge in high-cost areas last year, which in turn, drove up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas is projected to be $726,525 — or 150 percent of $484,350.
Alaska, Hawaii, Guam, and the U.S. Virgin Islands operate under special statutory provisions that establish different loan limit calculations with a baseline loan limit of $726,525 for one-unit properties.
The maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S. due to rising home values and a general increase in the baseline as well as ceiling loan limit, the FHFA indicated.