The Federal Housing Finance Agency announced the maximum conforming loan limits for mortgages would be increasing in 2021. The new loan limits for one-unit properties will be $548,250, increasing from the 2020 limit of $510,400. The Housing and Economic Recovery Act (HERA) requires that the baseline confirming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the average U.S. home price. According to the seasonally adjusted Housing Price Index, home prices increased 7.42% between the third quarters of 2019 and 2020, therefore the conforming loan limit will increase the same amount. Areas of the country 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. 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.
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