Conforming Home Loan Limit Rises for 2021

Conforming Home Loan Limit Rises for 2021

The Federal Housing Finance Agency (FHFA) has issued new conforming loan limits for 2021. In most of the country—including Philadelphia and surrounding suburbs—the upper limit for conforming loans for one-unit properties will rise to $548,250 from $510,400. In certain high-priced markets, the upper limit for 2021 will be $822,375.

The conforming loan limit is important in the housing market, because banks and other lenders can sell their conforming mortgages (those below the loan limit) to the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), freeing up cash to make additional loans. The conforming loan limit is adjusted annually, and the latest change reflects the general rise in housing prices.

Loans exceeding the conforming loan limit are referred to as jumbo loans or non-conforming loans. Jumbo loans may carry a higher interest rate and may also have stricter qualification guidelines. If you’re planning to purchase a home with a mortgage of more than $548,250, you can increase your down payment to lower your mortgage amount below the conforming limit or shop around for the best deal on a jumbo loan.

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