Fannie Mae, Freddie Mac conforming loan limits increase to $548,250 in 2021

The Federal Housing Finance Agency just announced a new baseline conforming loan limit for Fannie Mae and Freddie Mac in 2021. In most of the U.S., the maximum conforming loan limit (CLL) for one-unit properties will be $548,250, which is a 7.5% increase from the limit of $510,400 in 2020. This marks the fifth consecutive year of increases by the FHFA. 

The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which requires that the baseline CLL be adjusted each year to reflect the change in average U.S. home price. According to the FHFA House Price Index report, house prices increased 7.42%, on average between the third quarters of 2019 and 2020. Therefore, the baseline maximum CLL in 2021 will increase by the same percentage. 

For high-cost areas, where 115% of the local median home value exceeds the baseline CLL, the maximum loan limit will be higher than the baseline limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. Median home values generally increased in high-cost areas in 2020, driving up the minimum loan limits in many areas. 

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum CLL will be higher in 2021 in all but 18 counties in the U.S.

Click here to see a map of the new conforming loan limits across the U.S.

 

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