Every year, the Federal Housing Finance Agency (FHFA) adjusts the limits for conforming home loans to account for the change in home values. At the end of 2018, the FHFA announced new loan limits for 2019 that went into effect January 1st.
FHFA Loan Limit Increases
In 2019, the FHFA increased the baseline maximum loan limits for one-unit properties from the 2018 limit of $453,100 to $484,350.
Maximum limits for loans to purchase duplexes, triplexes, and four-flexes also increased. Loans for multi-unit properties are larger than those for single-unit properties and are adjusted in a similar way every year to reflect changes in home values across the nation.
According to the FHFA, “As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.”
Related: List of FHFA Maximum Loan Limits by County
Increased Loan Limits for High-Value Housing Markets
Areas in the U.S. with higher average home values have special loan limits that are higher than the baseline maximum. These include counties where the baseline maximum is equal to or exceeds 115% of the median home value in the area. High-value area limits cannot exceed 150% of the baseline limit, making the 2019 limit for these areas $726,525.
Much of the United States is not covered by a high-value loan limit and falls instead under the normal baseline limitations. Counties that have a higher limit may not necessarily receive the uppermost limit, since the maximum limits for individual counties are based on the median home values of the area.
Within Alaska, Hawaii, Guam, and the U.S. Virgin Islands, separate statutes dictate the high-value area loan limits. They may be more or less than the limits for other high-value areas; however, in 2019 the high-value area limits are the same.
Related: FHA Home Loan Limits Increased for 2019
Baseline Limit Changes
Changes in the baseline loan limits are based on changes to the House Price Index (HPI) year over year. This is a database of information maintained by FHFA that provides average home prices around the nation, as well as the national average of all homes sold in a particular period of time.
Based on changes in the index between the third quarter of 2017 and the third quarter of 2018, the baseline maximum loan limit was increased. Because the HPI showed a 6.9% increase in home prices during that period, the loan maximum was increased by 6.9% to keep up.
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