The new baseline conforming loan limit value for one-unit properties in 2023 will be $726,200, an increase of $79,000 from this year’s $647,200 value, according to a release from the Federal Housing Finance Agency (FHFA).
The rest of the new baseline loan limits are: $929,850 for two-unit properties, $1,123,900 for three unit properties and $1,396,800 for four-unit properties.
The Housing and Economic Recovery Act requires that the baseline loan limit for Fannie Mae and Freddie Mac must be adjusted each year to reflect the change in the average U.S. home price, according to a release. The Q3 2022 FHFA House Price Index found that home prices increased by 12.1% from last year, so the new baseline loan limit was expected to increase by the same percentage.
Due to rising home values, the FHFA said that CLLs will be higher in all but two U.S. counties or county equivalents.
The Wall Street Journal stated that for high cost markets the new ceiling loan limit will be $1,089,300, which is 150% of the baseline loan limit and up from the $970,800 of this year. The FHFA defines high cost markets as areas in which 115% of the local median home value exceeds the baseline conforming loan limit.
About 100 out of over 3,000 U.S. counties are designated as high-cost markets, according to the Wall Street Journal. This also includes some in New Jersey, Maryland, Virginia and Utah.
The remaining high cost loan limits are: $1,394,775 for two-unit properties, $1,685,850 for three unit properties and $2,095,200 for four-unit properties.
The FHFA also stated that special statutory provisions establish different loan limits for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $1,089,300 for one-unit properties (and follow the same progression as the high cost loan limits).
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