Inman News
The $26,250 increase in Fannie and Freddie’s baseline single-family conforming loan limit is the smallest since 2020, but pushes the ceiling in high-cost markets to $1.25M
Home price appreciation cooled this year but Fannie Mae’s and Freddie Mac’s conforming loan limits will still increase by $26,250 next year in most parts of the country, to $832,750, the Federal Housing Finance Agency announced Tuesday.
The increase in Fannie and Freddie’s baseline single-family conforming loan limit is the smallest since 2020, but pushes the ceiling in high-cost markets to $1,249,125.
Many lenders had already begun giving some borrowers a break, treating mortgages slightly above the current limit of $806,500 as if they were conforming — sparing homebuyers from having to qualify for jumbo mortgages with more restrictive terms and higher rates.
Rocket Mortgage, for example, last month started treating mortgages with balances of up to $825,550 as if they were eligible for purchase by Fannie Mae and Freddie Mac. United Wholesale Mortgage (UWM), Pennymac, CrossCountry Mortgage and Rate (formerly Guaranteed Rate) took a more cautious approach, pricing loans of up to $819,000 as conforming.
Rocket’s more bullish 2.4 percent increase in its unofficial conforming limit turned out to be on the money, with the Federal Housing Finance Agency (FHFA) announcing that the Home Price Index used to set the limit rose 3.26 percent over the year ending Sept. 30.
Fannie and Freddie loan limits, 2016-2026
Source: Federal Housing Finance Agency.
Congress has tied the conforming loan limit to the average U.S. home price, as measured by the FHFA’s seasonally adjusted, expanded-data House Price Index.
After staying flat at $417,000 for a decade following the collapse of the subprime lending boom and 2007-2009 Great Recession, the conforming loan limit finally inched up again by $7,100 in 2017.
Soaring home prices during the pandemic drove a record $98,950 increase in the conforming loan limit in 2022, to $647,200, up 18 percent from the year before.
Conforming loan limits for multi-unit properties
The baseline conforming limits for multi-unit properties for 2026 will be $1,066,250 for two-unit homes, $1,288,800 for three-unit homes, and $1,601,750 for four-unit properties.
The ceiling in high-cost markets will be $1,599,375 for two-unit properties, $1,933,200 for three-unit homes, and $2,402,625 for four-unit properties.
In Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the baseline loan limit for one-unit properties will be $1,249,125 and the ceiling equal to 150 percent of that, or $1,873,675.