Unveiling the 2025 Conforming Loan Limits and Their Impact
National Baseline
The Housing and Economic Recovery Act (HERA) mandates that the FHFA adjust the Enterprises' baseline CLL value annually to mirror the change in the average U.S. home price. Earlier today, the FHFA published its third quarter 2024 FHFA House Price Index® (FHFA HPI) report. This report provides crucial statistics on the increase in the average U.S. home value over the past four quarters. According to the nominal, seasonally adjusted, expanded-data FHFA HPI, house prices witnessed an average increase of 5.21 percent between the third quarters of 2023 and 2024. Consequently, the baseline CLL in 2025 will also increase by the same percentage.
In most of the United States, the 2025 CLL value for one-unit properties will be $806,500, representing a notable $39,950 (or 5.2 percent) rise from 2024. This increase reflects the overall trend in the housing market and is likely to have a significant impact on homebuyers and the mortgage industry.
High-Cost Areas
In areas where 115 percent of the local median home value exceeds the baseline conforming loan limit value, the applicable loan limit will be higher. HERA sets the high-cost area limit in these regions as a multiple of the area median home value, with a ceiling at 150 percent of the baseline limit. In 2024, median home values generally rose in high-cost areas, resulting in increased CLL values. The new ceiling loan limit for one-unit properties will be $1,209,750, which is precisely 150 percent of $806,500. This adjustment ensures that homebuyers in high-cost areas have access to adequate financing.
Special statutory provisions also come into play for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limits for one-unit properties will be $1,209,750, providing consistent support for the local housing markets.
Impact on Counties
Due to the rising home values, the CLL values will be higher in all but six U.S. counties or county equivalents. This indicates that a larger number of properties will be eligible for conforming loan financing, potentially making homeownership more accessible for a wider range of buyers. However, it also presents challenges and opportunities for lenders and the real estate industry as they adapt to these changes.
The FHFA's decision to adjust the conforming loan limits is a crucial step in maintaining the stability and liquidity of the mortgage market. By aligning the loan limits with the changing housing market conditions, the agency aims to support homeownership and stimulate economic growth.
Other Resources
The Federal Housing Finance Agency plays a vital role in regulating Fannie Mae, Freddie Mac, and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide over $8.4 trillion in funding for the U.S. mortgage markets and financial institutions. For more information, interested parties can visit www.FHFA.gov, follow the agency on X @FHFA, or explore its YouTube, Facebook, and LinkedIn channels. Media inquiries can be directed to MediaInquiries@FHFA.gov.