The Federal Housing Finance Agency (FHFA) has released the conforming loan limit values (CLL) for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023. In most of the United States, the 2023 CLL value for one-unit properties will be $726,200, an increase of $79,000 from $647,200 in 2022.
The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the GSEs be adjusted each year to reflect the change in the average U.S. home price. FHFA published its third quarter 2022 FHFA House Price Index (FHFA HPI) report, which includes statistics for the increase in the average U.S. home value over the last four quarters. According to the nominal, seasonally adjusted, expanded data FHFA HPI, house prices increased 12.21%, on average, between the third quarters of 2021 and 2022. Therefore, the baseline CLL in 2023 will increase by the same percentage.
For areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the applicable loan limit will be higher than the baseline loan limit. HERA establishes the high-cost area limit in those areas as a multiple of the area median home value, while setting the ceiling at 150% of the baseline limit. Median home values generally increased in high-cost areas in 2022, which increased their CLL. The new ceiling loan limit for one-unit properties will be $1,089,300, which is 150% of $726,200.
Special statutory provisions establish different loan limits for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $1,089,300 for one-unit properties.
Due to rising home values, the CLLs will be higher in all but two U.S. counties or county equivalents.