The Federal Housing Finance Agency (FHFA) has announced an increase in conforming loan limits for 2025. These changes impact conventional loans purchased by Freddie Mac and Fannie Mae, offering homebuyers new thresholds for borrowing. The revised limits reflect rising home values, providing increased borrowing power in both standard and high-cost areas.
Key Updates
- Effective Date: The new loan limits take effect for loans delivered or pooled into Mortgage-Backed Securities (MBS) starting January 1, 2025.
- Baseline Loan Limits:
- One-unit properties: $806,500 in most areas, $1,209,750 in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.
- Higher limits apply to two, three, and four-unit properties.
- High-Cost Area Limits: In designated high-cost areas, limits rise significantly to $1,209,750 for one-unit properties in the contiguous U.S.
High-Balance Loans
Loans exceeding baseline limits but within high-cost area thresholds are classified as high-balance loans. These require special handling per Fannie Mae’s Selling Guide. FHFA will allow a 30-day appeals period for adjustments based on local median home price changes.
Implementation
Lenders must ensure accurate loan classifications and use the updated limits for all deliveries from January 2025 onward. Desktop Underwriter® will implement these changes beginning December 7, 2024.