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Beginning next year, mortgage buyers Fannie Mae and Freddie Mac
will be able to acquire loans of up to $806,500 on single-family
homes in most of the country, the agency said Tuesday.
The new conforming loan limit is a 5.2% increase from its 2024
level.
FHFA oversees Fannie Mae and Freddie Mac, which buy home loans
from banks and other lenders, guaranteeing them against default.
The loans are then bundled into securities sold to investors.
But FHFA sets limits to the size of the loans that Fannie and
Freddie can buy. Such loans are known as conforming loans, while
mortgages above the conforming loan limit are known as jumbo
loans.
FHFA adjusts the limits of a confirming loan annually to reflect
changes in U.S. home values, which have been rising this year,
albeit more slowly, amid a housing slump that has U.S. home
sales are on track for their worst year since 1995.
The agency’s House Price Index showed U.S. home prices climbed
4.3% in the July-September quarter since the same period last
year.
“U.S. house price growth slowed in the third quarter, continuing
a trend that started in the fourth quarter of the previous
year,” said Anju Vajja, deputy director for FHFA’s Division of
Research and Statistics.
While elevated mortgage rates have helped limit homes sales, a
shortage of available properties in many markets has helped keep
prices ticking higher.
The 2025 single-family home conforming loan limit will apply to
most of the country, though the FHFA allows higher loan limits
for certain states, such as Alaska and Hawaii, and in counties
where the local median home value is more than double the
conforming loan limit.
For example, the conforming loan limit for single-family homes
in Los Angeles and New York counties will be $1,209,750 starting
next year.
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