Conforming loan limits for mortgages bought by Fannie Mae and Freddie Mac will increase for the second consecutive year in response to the rapid rise in home prices, the Federal Housing Finance Agency said.
The baseline limit for one-unit properties will increase 6.8% to $453,100 in 2018, from $424,100 in 2017. The amount of the increase is set by the Housing and Economic Recovery Act of 2008, which requires that conforming loan limits be adjusted annually to reflect changes in U.S. home prices. The FHFA's house price index increased 6.8% from the third quarters of 2016 to 2017.
The maximum loan limit is larger in certain high-cost areas — defined as counties and county-equivalents where the amount equal to 115% of the local median home price is higher than the baseline loan limit.
The new ceiling loan limit for single-unit properties in most high-cost areas will be $679,650, or 150% of $453,100, according to the FHFA. This figure is up by $43,500 from last year when it was $636,150.
Due to special statutory provisions, different loan limit calculations will be established for Alaska, Hawaii, Guam and the U.S. Virgin Islands. The baseline loan limit for these areas will be $679,650 for one-unit properties, though loan limits may be higher in some specific locations.
Of all U.S. counties, the loan limit will be greatest in Honolulu, with a one-unit limit of $721,050, followed by Kauai, Hawaii with a one-unit limit of $731,000.