Homebuyers have something to be thankful for this week with news that maximum conforming loan limits for Fannie Mae and Freddie Mac mortgages will be increasing to $548,250 in 2021.
That’s up from $510,400 in 2020, the Federal Housing Finance Agency (FHFA) noted in a press release.
This means homebuyers will be able to borrow up to the new level without triggering higher interest rates.
The loan limit adjustment comes via the Housing and Economic Recovery Act, which mandates that the loan limit be updated annually to reflect changes in the average U.S. home price.
The loan limit adjustment is based on the third quarter 2020 FHFA House Price Index report, which recorded an average annual increase of 7.42% in prices.
That loan limit applies to most counties across the country, but in high-cost areas — where 115% of the local median home value exceeds the baseline conforming loan limit — the baseline is set at $822,375, or 150% of the $510,400, according to FHFA.