New Conforming, FHA Loan Limits for 2021

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The Federal Housing Finance Agency (FHFA) and Federal Housing Administration (FHA) have announced new maximum conforming loan limits and FHA loan limits for 2021.

Conforming Loan Limits for 2021

In Central and Western New York:

  • The maximum conforming FHFA loan limit for one-unit properties will be $548,250, an increase from $510,400 in 2020.
  • Multi-family property conforming limits increased as follows: Two-family properties are up to $702,000, three-unit homes up to $848,500 and the new limit for four-unit properties is $1,054,500.

The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect changes in the average U.S. home price. The percentage increase in the maximum conforming loan limit follows the Housing Price Index for the prior four quarters.

“The annual FHFA adjustment is important for homebuyers, providing better financing options for loans that would traditionally have fallen into the ‘jumbo’ category,” said GRB’s SVP, Residential Mortgage Manager Mike Pulver.

For new loan applications or applications already in process, the loan amounts will be subject to 2020 limits as long as the loan closes by Dec. 31. Loans closing on Jan. 1 or after will fall under the 2021 limits.

FHA Loan Limits

The Federal Housing Administration (FHA) announced new maximum loan limits for FHA home mortgages in 2021. In Central and Western New York:

  • The maximum FHA loan limit for one-unit properties will be $356,362, an increase from $331,760 in 2020.
  • Multi-family FHA loan limits increased as follows: Two-family properties are up to $456,275, three-unit homes up to $551,500 and the new limit for four-unit properties is $685,400.

Changes to FHA loan limits are linked to the Housing and Economic Recovery Act (HERA), which requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect changes in the average U.S. home price. FHA loan limits are typically 65% of the conforming loan limit.

“The annual adjustment is important for homebuyers, providing better financing options for those purchasing a first home,” said GRB’s SVP, Residential Mortgage Manager Mike Pulver. “In Rochester, our market has been extremely competitive. The increase in the FHA loan amount will be crucial in helping potential buyers keep pace with the increase in home values.”

In order to use the new loan limits, an FHA case number must be assigned on or after Jan. 1, 2021. Those with a case number assigned up through Dec. 31, 2020 will use the current year’s loan limits.

Contact GRB’s Mortgage Team with any questions.