Homebuyers will soon have the ability to buy a higher-priced home without needing a jumbo loan.
On Tuesday, November 24, HousingWire reported that the Federal Housing Finance Agency announced new conforming loan limits for Fannie Mae and Freddie Mac for 2021. The new baseline limit of $548,250 is a 7.5% increase from 2020’s limit of $510,400 and marks the fifth consecutive year of increases from the FHFA. In 2016, the FHFA increased the Fannie and Freddie conforming loan limit for the first time in 10 years, and since then, the loan limit has gone up by $131,250.
For high-cost areas, where 115% of the local median home value exceeds the baseline limit, the maximum loan limit will be higher. The Housing and Economic Recovery Act of 2008 established 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. So, the new conforming loan limit for single-unit properties in most high-cost areas will be $822,375 (or 150% of $548,250) in 2021.
What this means for borrowers is an ability to finance the purchase of a higher-priced home with a conventional loan. Here are some of the possibilities that will open up nationally starting on January 1, 2021:
- 3% down – $565,200 purchase price
- 5% down – $577,100 purchase price ($865,600 purchase price in high-cost areas)
- 10% down – $609,166 purchase price ($913,750 purchase price in high-cost areas)
- 20% down – $685,300 purchase price ($1,027,000 purchase price in high-cost areas)
Check out FHFA’s interactive map for complete details about conforming loan limits by county across the United States.
As more buyers have access to affordable loans at historically low interest rates in 2021, CrossCountry Mortgage will be there for them. Contact your trusted CCM loan officer today to get ready to take advantage of these new loan limits. We’re here to help!