GSE limit for single-family loans to surpass $500K in 2020

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Loan limits for most mortgages Fannie Mae and Freddie Mac buy will exceed $500,000 for the first time ever next year, with the maximum for most high-cost areas being $765,000.

Next year’s standard one-unit loan limit of $510,400 is based on changes in average U.S. home prices. The Federal Housing Finance Agency’s home price index was up 5.38% year-over-year in the third quarter. Currently, the conforming one-unit property loan limit is $484,350.

While the increase in the standard single-family loan limit is significant, it reflects slightly slower year-to-year growth in home prices. During the previous two years, loan limits increased nearly 7%.

Regions where 115% of the local median home value exceeds the baseline conforming loan limit are generally considered high-cost areas under the Housing and Economic Recovery Act. The maximum in these regions is 150% of the standard loan limit.

Two states and two U.S. territories (Alaska, Hawaii, Guam and the U.S. Virgin Islands) have special statutory authority related to loan limits. In these areas, the baseline limit for one-unit properties is $765,600.

Within the mainland United States, certain counties have been designated as eligible for high-cost loan limits. Some of these can be found in California, Colorado, the District of Columbia, Georgia, Idaho, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Tennessee, Utah, Virginia, Washington state and Wyoming.

The Department of Housing and Urban Development is expected to set its 2020 loan limits for government-insured mortgages next month. The lowest loan limit for the Federal Housing Administration program is tied to 65% of the standard conforming loan limit.

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