The Federal Housing Finance Agency (FHFA) has announced an increase in the size of home loans that the government can guarantee against default, in response to the rising housing prices. Starting next year, mortgage buyers Fannie Mae and Freddie Mac will be able to acquire loans of up to $806,500 on single-family homes in most parts of the country. This new conforming loan limit represents a 5.2% increase from the 2024 level.
FHFA, which oversees Fannie Mae and Freddie Mac, sets limits on the size of loans that these entities can purchase. Loans within these limits are known as conforming loans, while those exceeding the limit are categorized as jumbo loans. The adjustment of conforming loan limits is done annually by FHFA to reflect changes in U.S. home values, which have been steadily increasing, albeit at a slower pace due to a housing slump that has impacted U.S. home sales.
