If you are looking to buy a home with a mortgage backed by Fannie Mae or Freddie Mac, you should know that the maximum loan amount they will accept is going up in 2024. This is based on the latest data from the Federal Housing Finance Agency (FHFA), which oversees these two government-sponsored enterprises.
The conforming loan limit (CLL) is the maximum amount that Fannie Mae and Freddie Mac will buy or guarantee mortgages for. This limit is set by law and adjusted annually by the FHFA, based on the average change in home prices across the country.
The CLL affects the availability and cost of mortgage credit, as loans that exceed the limit are considered non-conforming or jumbo loans, which typically have higher interest rates and stricter underwriting standards.
According to the FHFA, the average U.S. home price rose by 5.56 percent from the third quarter of 2022 to the third quarter of 2023, based on its House Price Index (HPI). Therefore, the CLL for most of the U.S. will increase by the same percentage, from $726,200 in 2023 to $766,550 in 2024. This applies to single-family homes in most counties and county equivalents.
However, some areas have higher home values and therefore higher CLLs. These are known as high-cost areas, where the median home value is more than 115 percent of the national baseline. In these areas, the CLL is set at a multiple of the local median home value, up to a maximum of 150 percent of the national baseline. This means that the highest possible CLL for 2024 will be $1,149,825, which applies to single-family homes in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, as well as some counties in California, Colorado, Connecticut, District of Columbia, Florida, Idaho, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, Utah, Virginia, Washington, and Wyoming.
You can find the specific CLL for your county or county equivalent on the FHFA website.
However, home prices are still rising faster than incomes in many markets, which could make it harder for some buyers to save for a down payment or meet other eligibility criteria. Additionally, lenders may have their own requirements and guidelines that differ from those of Fannie Mae and Freddie Mac.
Therefore, if you are planning to buy a home in 2024 or beyond, you should consult with a qualified mortgage professional who can help you find the best financing option for your situation and budget.
We hope this article was of value to you. For more great tips, bookmark our site and for all your mortgage needs, visit the A Team at TMFFMS.
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