Federal Housing Finance Agency Announces Loan Limit Increase to $453,100 in 2018

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The Federal Housing Finance Agency (FHFA) announced Tuesday that it is increasing the conforming loan limits for Fannie Mae and Freddie Mac in 2018. This is the second year in a row—and the second time since 2006—it is doing so.

The FHFA will be increasing the limits from $424,100 to $453,100 for next year.

The conforming loan limit stayed at the level mandated by 2008’s Housing and Economic Recovery Act (HERA), $417,000, until last year, when it was first increased. When established, the Recovery Act had mandated that the baseline loan limit could not rise until home prices returned to pre-decline levels.

Related: The Pros and Cons of Conventional Real Estate Loans

Rising Home Prices Necessitate a Loan Limit Increase

To explain why it is raising limits for the second year straight, the FHFA cited rising home prices, indicating that U.S. home values have increased 6.8% on average between Q3 of 2016 and Q3 of 2017 per the 2017 House Price Index report.

For “high-cost areas,” where the loan limit is calculated as a multiple of the area median home value, the new ceiling will be $679,650—which is 150% of $453,100 per HERA guidelines—for 1-unit properties in the contiguous United States. This is up from 2017’s limit of $636,150.

Find Out Your Loan Limit by County Here

Certain other states and territories—including Alaska, Hawaii, Guam, and the U.S. Virgin Islands—will see an increased baseline loan limit of $679,650 for 1-unit properties, although that limit may be higher in certain locations.

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