New Federally Backed Loan Limits 2021 May Help Homebuyers

New Federally Backed Loan Limits 2021 May Help Homebuyers

Home prices have been steadily increasing in 2020—and as home prices increased, many buyers found they needed larger mortgages in order to purchase homes. But because there’s a limit on conforming loans, many buyers either had to explore alternative loan options (which often carry a higher interest rate) or look for homes in a lower price range (which, with inventory low in markets across the country, proved extremely difficult). New federally backed loan limits for 2021 may help homeowners.

Luckily, access to larger conforming loans is on the horizon.

On November 24th, the Federal Housing Finance Agency announced they would officially be increasing the conforming loan limits for Fannie Mae and Freddie Mac-backed mortgages in 2021. Currently, the limit for conforming loans for single-family units for most areas of the United States is $510,400. That limit will increase to $548,250 in 2021—an increase of 7.4 percent. This is good news for home buyer that may be struggling through the pandemic and realize that a larger home would be a better option for their family.

In higher cost markets (like areas of California and New York), the limit for conforming loans will be higher at $822,375—which is 150 percent of the baseline conforming loan limit of $548,250.

And current FED predictions say, that interest rates will remain low through 2023

The Takeaway:

What does that mean for you? Increasing the limit for conforming loans will allow buyers to increase their purchasing power and keep up with rising prices—so if you’ve been thinking about buying a home, 2021 is looking like a great time to make a move.  We are here to help you!  We want to be YOUR Realtor in the Gainesville Florida market.