The Federal Housing Finance Agency (FHFA) announced in November 2018 that the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019 would be raised again to $484,350.
The average increase for the House price Index rose 6.9% for the year which is the reason for the increase over the 2018 loan limits. In most of the U.S., the 2019 maximum conforming loan limit for one-unit properties will be $484,350, an increase from $453,100 in 2018.
Fannie and Freddie have set underwriting rules that conforming loans must adhere to including credit and income requirements. These are also referred to as conventional loans and are under jumbo loan amounts. They are considered lower risk and after closing the loans are sold to investors on the secondary market.
As a result, mortgages with conforming loan amounts tend to carry lower mortgage rates than jumbo loans which are above the conforming loan limit. For more information on other types of loan programs, visit our Mortgage Finance Center.
Conforming Loan Requirements
* the loan amount must be at or below the conforming loan limit
* there is a minimum credit score requirement generally of 620 FICO
* the loan must meet qualifying guidelines set by Fannie Mae or Freddie Mac
* there are other underwriting criteria as well
* these limits apply to 1 to 4 unit residential properties
The conforming loan limit can change annually, as determined by the FHFA, based on any changes to the October-to-October Home Price Index report. This report includes estimates for the increase in the average U.S. home value over the last four quarters, and showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018. It is announced in November and goes into effect the following January.
The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit at $417,000. Back in 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, in 2018, the FHFA raised the loan limits from $424,100 to $453,100.
Now for 2019, the FHFA has increased the loan limit again to $484,350.
Conforming Limits Apply to 1 to 4 Unit Residential Properties:
One-unit properties: $484,350
Two-unit properties: $620,200
Three-unit properties: $749,650
Four-unit properties: $931,600
These residential property limits generally apply to the continental US states. There are several counties that FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limits.
There are a few counties in the US that have “high cost areas”, and one in Florida that does. Monroe County includes the Florida Keys and the lowest southwest section of Florida west of Miami-Dade county. Monroe’s limits are: $ 677,200, 529,000, $ 818,600, $ 1,017,300
For one-unit properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the conforming loan limit is $726,525, which is 50% higher than the baseline.
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