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FHFA conforming loan limits to rise 7% for 2021, reflecting hot housing market

California home
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As home prices soar, the Federal Housing Finance Agency said Tuesday that it’s raising the loan limits for mortgages that can be bought by Fannie Mae and Freddie Mac in 2021.

For much of the United States, the divide between conforming loans and jumbo mortgages will be $548,250. That’s a 7.4 percent increase from this year’s limit of $510,400.

In pricey housing markets — including much of California, all of New York City and the entire states of Alaska and Hawaii — the new limit is $822,375, up from $765,600 in 2020.

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.

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.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.