FHFA Increases Baseline Conforming Loan Limit by $40K+

The Federal Housing Finance Agency (FHFA) has announced the conforming loan limit values (CLLs) for mortgages that Fannie Mae and Freddie Mac will acquire in 2024. In most of the United States, the 2024 CLL value for one-unit properties will be $766,550, an increase of $40,350 from 2023.

The Housing and Economic Recovery Act (HERA) requires FHFA to adjust the GSEs’ baseline CLL value each year to reflect the change in the average U.S. home price.

Under a series of laws enacted in past years, including the Economic Stimulus Act of 2008, the American Recovery and Reinvestment Act of 2009, Public Law 111-88, and Public Law 111-242, higher loan limit values have applied to Fannie Mae and Freddie Mac acquisitions of certain seasoned mortgages. Acquired loans that were originated between July 1, 2007 and September 30, 2011, are subject to previously announced limit values determined under those laws. The applicable CLL value for such seasoned loans is as high as $729,750 for one-unit properties in the contiguous U.S. In 2024, the baseline loan limit value will surpass the limit set for these seasoned loans, and the GSEs will no longer be required to select the higher of the two limit values to determine eligibility.

The FHFA also published its Q3 2023 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. According to the nominal, seasonally adjusted, expanded-data FHFA HPI, house prices increased 5.56%, on average, between the third quarters of 2022 and 2023. Therefore, the baseline CLL in 2024 will increase by the same percentage.

The FHFA HPI is a measure of the movement of single-family house prices. The FHFA HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties. The data is obtained by reviewing repeat mortgage transactions on single-family properties whose mortgages have been purchased or securitized by the GSEs since January 1975.

For areas in which 115% of the local median home value exceeds the baseline conforming loan limit value, 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 2023, which increased their CLL values. The new ceiling loan limit for one-unit properties will be $1,149,825, which is 150% of $766,550.

Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limits will be $1,149,825 for one-unit properties.

Due to rising home values, the CLL values will be higher in all but five U.S. counties or county equivalents.

Click here to view Fannie Mae and Freddie Mac Conforming Loan Limits for Mortgages Acquired in Calendar Year 2024.

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