The Federal Housing Finance Agency (FHFA) has announced the conforming loan limit values (CLLs) for mortgages to be acquired by the government-sponsored enterprises (GSEs)–Fannie Mae and Freddie Mac–in 2023. In most of the U.S., the 2023 CLL value for one-unit properties will be $726,200, an increase of $79,000 from $647,200 in 2022.
The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the GSEs be adjusted annually to reflect the change in the average U.S. home price.
The FHFA also published its Q3 2022 FHFA House Price Index (FHFA HPI) report, which includes statistics for the increase in the average U.S. home value over the last four quarters. U.S. house prices rose 12.4% from Q3 of 2021 to Q3 of 2022, according to the FHFA HPI. House prices were up just 0.1% compared to Q2 of 2022. FHFA’s seasonally adjusted monthly index for September was up 0.1% from August. Therefore, the baseline CLL in 2023 will increase by the same percentage.
“House prices were flat for Q3, but continued to remain above levels from a year ago,” said William Doerner, Ph.D., Supervisory Economist in FHFA’s Division of Research and Statistics. “The rate of U.S. house price growth has substantially decelerated. This deceleration is widespread with about one-third of all states and metropolitan statistical areas registering annual growth below 10%.”
The FHFA reports that in areas where 115% of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting the ceiling at 150% of the baseline limit. Median home values generally increased in high-cost areas in 2022, which increased their CLL. The new ceiling loan limit for one-unit properties will be $1,089,300, which is 150% of $726,200.
Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands, and in these areas, the baseline loan limit will be $1,089,300 for one-unit properties.