FHFA Sets New Loan Limits For 2024


Come January 1, the Federal Housing Finance Agency (FHFA) will increase the maximum baseline conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac to $766,550, an increase of $40,350 from the current limit.

The conforming loan limits are required by the Housing and Economic Recovery Act (HERA). They reflect the percentage change in the average U.S. home price during the most recent 12-month or four-quarter period ended before the time of determining the annual adjustment.

Based on the FHFA’s home price data, the conforming loan limit in 2024 will rise 5.56%.

The new loan limits for higher-cost areas will be set at $1,149,825 – which is 150% of the baseline loan limit of $766,550. The previous ceiling for higher-cost areas was $1,089,300.

In a statement, the Housing Policy Council noted that the higher-priced loan limits mean that “American taxpayers will be backing mortgages that may be more than ten times the median income of American households, which was $74,580 in 2022. And in high-cost areas, that backing may cover mortgages more than 15 times the national median household income.”

“In 2013, President Obama called for a reduction in conforming and FHA loan limits to restore the balance between taxpayer-backed lending and private lending,” the HPC says in its statement. “Yet ten years later, today’s announcement continues the relentless march of our housing finance system away from relying on private capital.”

“Today’s announcement threatens to exacerbate the affordability crisis and increase the housing finance system’s over reliance on government backing,” the HPC adds. “As we warned in 2022 and 2021, the question of the appropriate role of the government in the housing finance system has gone unanswered for far too long. The Housing Policy Council urges Congress and the Biden Administration to take up this question soon.”

The FHFA’s most recent home price index shows that U.S. home prices increased 2.1% in the third quarter compared with the second quarter.

Compared with the third quarter of 2022, home prices were up 5.5%, according the FHFA’s data.

Month-over-month, home prices in September were up 0.6% from August according to the FHFA’s HPI report, which uses a different methodology from the Case-Shiller and CoreLogic HPI reports.

“U.S. house price growth continued to accelerate in the third quarter, appreciating more than in each of the previous four quarters,” says Anju Vajja, principal associate director in FHFA’s Division of Research and Statistics. “House prices rose in the third quarter in all census divisions and are higher than one year ago, driven primarily by a low supply of homes for sale.”

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