The rising pace of home selling prices during 2020 could mean that some buyers won’t need financing through jumbo mortgages.
The Federal Housing Finance Agency, which oversees Freddie Mac and Fannie Mae, announced that conforming loan limits for one-unit properties will rise to $548,250 for 2021 in most counties across the United States, up from $510,400 in 2020. That means that borrowers who need to finance houses above the loan limit for their area will need to apply for a jumbo loan, which generally has tighter loan approval guidelines and requires a larger down payment.
The limits are set according to home price increases. The FHFA’s House Price Index showed that home prices increased an average of 7.42 percent between the third quarters of 2019 and 2020. That means the baseline conforming loan limit will increase by that same amount.
FHA loan limits, which are set at 65 percent of the national conforming loan limit, will rise on Jan. 1 from $331,760 to $356,362 in most housing markets.