Higher Loan Limits Coming Jan. 1

Real estate professionals have some good news to share with their clients. On Jan. 1, buyers will be able to get much larger mortgages, whether they’re applying for conventional or FHA-backed loans due to higher loan limits.

Each year, Fannie Mae and Freddie Mac adjust their limits for conventional, conforming loans based on changes in median home prices. For 2018, the companies are allowing for higher loan limits by nearly 7 percent, to a maximum loan amount of $453,100. That’s up from $424,100. In the country’s most expensive markets, such as San Francisco and New York, loans can go as high as $679,650. (Special rules apply in Alaska, Hawaii, and some U.S. territories, which are eligible for even higher limits.)

Most home loans are conforming, conventional loans, so the higher loan limits should help most borrowers. Conventional loans that exceed these limits are considered jumbo loans and aren’t backed by the federal government. That can make them pricier to get.

The Federal Housing Administration is statutorily required to peg its loan limits to Fannie and Freddie’s limits, so it will also start backing higher loan limits starting Jan. 1. Its loan limits are the same as those of Fannie Mae and Freddie Mac: $453,100 in most areas and $679,650 in high-cost areas.