On December 2nd, the Federal Housing Finance Agency (FHFA) announced increases to conforming loan limits for mortgages to be acquired in 2021. These limits represent the maximum size (dollar amount) for mortgage loans that can be acquired by Freddie Mac and Fannie Mae. The limits are based off the median and average home prices within a particular county. In most of the country the 2021 maximum conforming loan limit (CLL) for one-unit properties will be $548,250, a 7.42% or $37,850 increase from 2020 limits.
This marks the fifth consecutive year of loan limit increases from the FHFA, in order to keep up with rising home values. The 2021 increase is a direct result of the significant home-price gains that occurred during 2020, which is factored into the calculations FHFA uses to determine the limits each year.
For areas in which 115% of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline loan limit. In higher-cost counties, these limits increased based on the higher median home values in the area compared to the national average, (like Summit and Utah county).
The loan limit increase is a benefit to both buyers and sellers. It gives buyers more spending power when purchasing a property since this helps them keep pace with the rising home prices. They may even have more of an opportunity to buy in certain neighborhoods that they previously thought were off-limits. For those looking to sell the new increase will open up more possibilities for more interested buyers due to their increased ability to finance.
We love a good win-win situation!
If you are looking to take advantage of the increased loan limits, we can start underwriting loans with the new loan limits AS OF TODAY, no need to wait until January 1st! Give us a call to get started.