With higher home prices come higher loan amounts, and the FHA, Fannie Mae, and Freddie Mac all recently adjusted their loan limit amounts to account for higher home prices. Those higher loan limits took effect on Jan. 1, 2020, meaning the FHA, Fannie Mae, and Freddie Mac are all now backing larger loans.
Link to Original Story: https://www.housingwire.com/articles/fha-fannie-mae-freddie-mac-are-all-now-backing-larger-loans/?utm
The 2020 FHA loan limit for most of the country is now $331,760, an increase of nearly $17,000 over 2019’s loan limit of $314,827.
There are several counties (approximately 70 like Orange County and Los Angeles) where the median home price far exceeds the FHA loan limit floor. Those areas where the loan limit exceeds this floor are considered “high-cost areas,” and HERA requires the FHA to set its maximum loan limit “ceiling” for those high-cost areas at 150% of the national conforming limit.
Therefore, for those approximately 70 “high-cost” counties, the FHA’s 2020 loan limit is $765,600, an increase of nearly $40,000 over 2019’s total of $726,525.
At the end of November, the government-sponsored enterprises announced that the 2020 maximum conforming loan limit was increasing from 2019’s level to $484,350 to $510,400 for 2020. That marks the fourth straight year that the FHFA has increased the conforming loan limits after not increasing them for an entire decade from 2006 to 2016. Fannie Mae and Freddie Mac are now backing loans that exceed $510,000, while the FHA is backing loans of just above $331,000.
For much more on the Fannie and Freddie loan limits, including a breakdown of the loan limits by county, click here, and for much more on the FHA loan limits, including an analysis of loan limits by county, click here.
Click here see a related article with insight into the 2020 housing market and our Southern California real estate market predictions for Orange County, Los Angeles, and San Diego.