FHFA Increases Conventional Loan Limits For 2018

FHFA Increases Conventional Loan Limits For 2018

This BLOG On FHFA Increases Conventional Loan Limits For 2018 Was UPDATED On December 7th, 2017

FHFA Increases Conventional Loan Limits For 2018 from $436,100 to $453,100 effective January 2018. This is great news for home buyers seeking Conventional Loans on higher priced homes.

  • Fannie Mae and Freddie Mac are the two mortgage giants that sets conventional mortgage guidelines
  • The reason why FHFA Increases Conventional Loan Limits is due to rising home prices nationwide
  • There is no word on HUD, VA, USDA on when they will follow the lead of FHFA on FHFA Increases Conventional Loan Limits
  • Normally when one agency raises loan limits, the others follow back to back

Conventional Mortgage Loans

For all conventional mortgage loans  dated after January 1, 2018, the maximum conventional mortgage loan limits will be increasing to $453,100.

  • This announcement was sudden notice and not all mortgage lenders will honor the new conventional loan limit increase
  • The Gustan Cho Team at USA Mortgage will honor the new FHFA Increase Conventional Loan Limits for January 2018
  • We do not have any overlays on government and conventional loans at USA Mortgage


Regardless of lock status, if a loan is currently approved by the underwriting department and the borrower requests to take advantage of the increased loan amount parameters, the loan must be re-submitted to Underwriting with new Automated Underwriting System Findings for consideration.

  • All revised loan amounts are subject to the most recent guideline changes and eligibility criteria
  • Conventional conforming loan limits are published by FHFA 

Federal Housing Finance Agency

The Federal Housing Finance Agency (FHFA) is the governmental agency in charge of Fannie Mae and Freddie Mac. Fannie and Freddie are the two mortgage giants that sets conforming lending guidelines.

  • In 2016, the FHFA increases Conventional Loan Limits for home loans that are sold to Fannie Mae and/or Freddie Mac since the 2008 Real Estate and Mortgage Meltdown
  • The Federal Housing Finance Agency is increasing the Conventional Loan Limits again for the second year in a row
  • This FHA Increases Conventional Loan Limits for 2018 is the second time since 2006
  • The conforming loan limits will increase to $453,100 which is a substantial increase of the conventional loan limit from the current $436,100
  • All conventional loan limits for both Fannie Mae and Freddie Mac need to be set and determined by The Housing And Recovery Act of 2008
  • This establishes the conventional loan limit at $417,000 which mandated that after periods of price declines
  • The conventional loan limit cannot increase again until housing values return to pre-decline levels
  • Then last year, the Federal Housing Finance Agency (FHFA) increased the loan limit to $436,100

The FHFA announced that the reason for the agency in increasing conforming loan limits is due to housing values rising nationwide. Due to the increase of home prices, the Federal Housing Finance Agency is increasing the conventional loan limits for the second year in a row.

Increase Of Home Prices Nationwide

The 2017 Federal Housing Finance Agency third quarter House Price Index Report revealed that home prices increase 6.8% during the third quarter of 2016 and 2017.

  • The House Price Index Report is date that gives an estimate for the increase of home values in the United States over the last four quarters
  • Conventional Loan Limits in high cost areas as well. High cost areas are counties where 115% of the local median home value surpasses the baseline mortgage loan limits

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. According to the FHFA, median home values “generally increased” in high-cost areas in 2017, which drove up the maximum loan limits in many of those areas. Therefore, the new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 (which is 150% of $453,100) for one-unit properties in the contiguous U.S.  In 2017, the high-cost loan limit was $636,150. According to the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $679,650 for one-unit properties, but the FHFA notes that loan limits may be higher in some specific locations. For a full look at the conforming loan limits, by county. The FHFA notes that as a result of “generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit,” the 2018 maximum conforming loan limit will be higher in all but 71 counties or county equivalents in the U.S. than it was in 2017.

Home Buyers looking for a direct lender with no lender overlays on government and conventional loans, please contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or email us at gcho@loancabin.com. We are available 7 days a week, evenings, weekends, and holidays.

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