Housing Loan Limits Are Going Up Next Year

The Federal Housing Finance Agency has decided to raise the maximum amount they'll guarantee for single-family home loans, starting in 2025. This change reflects the increasing prices of homes across the country. From January, Fannie Mae and Freddie Mac can now back loans of up to $806, 500 for homes in most places. That's a 5. 2% increase from this year's limit, showing how home values have been steadily climbing. These loan limits are set by the FHFA, which oversees Fannie Mae and Freddie Mac. These companies purchase home loans from banks and other lenders, so they can be bundled into securities and sold to investors. Loans within this limit are called conforming loans, while those above it are known as jumbo loans.

Home prices have been rising, although not as quickly as before. The FHFA's House Price Index showed a 4. 3% increase in the third quarter compared to the same period last year. Even with higher mortgage rates, there's still a shortage of homes for sale in many areas, which has kept prices high. In some areas, like Los Angeles and New York counties, the conforming loan limit will be even higher, at $1, 209, 750. This is because these areas have especially high home values. The FHFA adjusts these limits annually to match changes in home prices.

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