As home prices continue their record-breaking climb, the Federal Housing Finance Agency said Tuesday that loan limits for mortgages that can be bought by Fannie Mae and Freddie Mac in 2022 will rise by the largest percentage ever.

For much of the United States, the divide between conforming loans and jumbo mortgages will be $647,200. That’s an 18 percent increase from this year’s limit of $548,250.

In pricey housing markets — including much of California, all of New York City, the District of Columbia and the entire states of Alaska and Hawaii — the new limit is $970,800, up from $822,375 in 2021.

And some markets fall in between. In Colorado’s Boulder County, the new limit for conforming loans is $747,500. In Florida’s Monroe County, home to the Keys, the limit is $710,700. In the Nashville metro area, it’s $694,600.

The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, said the increase was based on its House Price Index for the third quarter. Since the coronavirus recession began this spring, the housing market has been on fire — inventories are tight, buyer demand is strong and mortgage rates have fallen to record lows.

The agency said Tuesday that U.S. house prices rose 18.5 percent from the third quarter of 2020 to the third quarter of 2021, the fastest appreciation on record. Idaho led the way with a 35.8 percent jump in prices, followed by Utah’s 30.3 percent spike.

Rising loan limits let a wider group of borrowers qualify for the loans backed by Fannie and Freddie. Because the market for jumbo loans is smaller than the market for conforming loans, jumbo borrowers might need to shop around a bit more to find a mortgage.

“The existing loan limits have made it hard for people in certain parts of the country to take advantage of historically-low interest rates as prices have risen and both prospective and existing home owners have been able to afford more,” says Jodi Hall, president of Nationwide Mortgage Bankers in Melville, New York.

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