Need to Borrow More for a House? You’ll Be Able to in 2021

By Lucas Smith | March 18, 2021

Amy Dobson Senior Contributor Real Estate covering everything from luxury homes to housing trends around the world.

The past year has seen house prices rise in most major markets around the U.S. and as a result the Federal Housing Finance Agency announced it would raise the amount of money buyers could borrow for a mortgage in 2021. As of January 1st, qualified borrowers can take out loans as high as $548,250 in all but 18 U.S. counties, before crossing into the territory considered a jumbo loan. For 2020 the borrowing limit, called the non-conforming loan limit, was $510,400.

These numbers apply to loans acquired by Freddie Mac and Fannie Mae, both of which are overseen by the FHFA.

This increase shows not only prices that have risen, but how much they have accelerated in just the past year. The additional $38,150 is an increase of about 7.4%, whereas last year when limits rose to $510,400 the increase was only 5.38%. The FHFA determines the percentage increase by analyzing the average repeat purchase and refinance data for single-family house mortgages they have access to across about 400 cities. While these numbers show a marked increase, the numbers are even higher when looking at median sales prices without including refinances. Redfin, for example, reports median sales prices increased 15% in February 2021 compared to the year before.

For metro areas considered to be more expensive, such as New York or Washington D.C., the FHFA sets their loan limits at 150% of the limit for the rest of the country. Thus, borrowers in high-priced markets will be able to borrow $822,375 during 2021.

FHA loans, typically used by low and moderate income buyers, are set at 65% of the national loan limit. They will rise to $356,362, up from $331,760 in 2020.

For a full list of the loan limits by county, here is the breakdown provided by the FHfA.

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