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Loan Limits for 2021

Updated: Jan 22, 2021

· The Federal Housing Finance Agency (FHFA) has announced that the 2021 conforming loan limits for government-sponsored enterprises Fannie Mae and Freddie Mac will increase to $548,250 in most areas of the country. These are for Conventional or conforming loans. So let’s talk about this first an then let’s chat about what the FHA (Federal Housing Administration) did as well

· The loan limit on a convention loan is currently at $510,400 which means you can get a loan as long as you qualify for this to purchase a home. Your down payment amount would be on top of this and though some conventional mortgages have a down payment requirement as low as 3 percent, most typically require a down payment of 5 to 20 percent,

· This is the fifth consecutive year that conforming loan limits for single family properties have been raised.


· Prior to this, conforming loan limits were unchanged from 2006 to 2016. Since 2016, the loan limit has risen by $131,250.

· What this means is that the amount you can borrow for a conventional loan is going up to $548,250 in 2021 and the reason

· Conforming loan limits have increased is the Housing and Economic Recovery Act (HERA) mandated that the baseline limit be adjusted every year to reflect changes in the average U.S. home price.

· FHFA’s third-quarter 2020 home-price index estimated that home prices grew by a seasonally adjusted 7.42% over the past four quarters, so the agency increased next year's conforming loan limit next by the same percentage.

· Some parts of the country will have a different loan limit. Like Hawaii or US Virgin Islands. These are mainly high-cost areas

· HERA (the Housing and Economic Recovery Act) establishes the loan ceiling in these areas as a multiple of the local median home value and caps the ceiling at 150% of the baseline loan limit.

· Since median home values generally grew in high-cost areas in 2020, the maximum loan limit in these locations was driven above the 150% threshold. This means that the new conforming loan limit for single family properties in most high-cost areas will be $822,375 (150% of $548,250).

· As a result of rising home values, the 2021 conforming loan limit will be higher in all but 18 counties in the U.S.

· Industry stakeholders applauded the FHFA for raising the loan limits to keep up with rising prices.

· Charlie Oppler, president of the National Association of Realtors recently commented.. “With home prices setting records in many U.S. markets, the National Association of Realtors is pleased to see the FHFA raise its national conforming loan limits for 2021, With an assurance that loan limits will align with home price growth, this decision will help ensure homeownership remains within reach for countless American families. As we await final 2021 figures from the FHA, NAR urges federal policymakers to continue prioritizing market stability and access to safe, affordable financing for all U.S. consumers.”

The FHA also bumped up loan limits for 2021

· The Federal Housing Administration (FHA) just announced its new loan limits for 2021 to $356,362 in most areas of the country.

· That’s up from $331,760 in 2020, an increase of almost $25,000 driven by enormous annual gains in home prices nationwide.

· The FHA’s mission is to support low-to-moderate income borrowers and borrowers can normally put a little as 3% down to purchase a home.

· In Deschutes, Crook, and Jefferson Counties, loan limits for FHA for 2021 are:

County1-Family2-FamilyDeschutes$460,000$588,850Crook, Jefferson$356,362$456,275

· The limits are determined by the conforming loan limits set by the Federal Housing Finance Agency (FHFA) for loans backed by Fannie Mae and Freddie Mac. The FHA is required by law through the National Housing Act to compute its numbers based on those FHFA loan limits.

· With the increase in sales price in 2020 the limits have increased making it easier for buyers to purchase a home within these parameters.


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