Fannie and Freddie Will Back Homes Costing Nearly $1 Million as Prices Surge
According to USA Today, the federal government’s support for homeownership is about to expand as home prices continue to surge and borrowers struggle to buy.
Fannie Mae and Freddie Mac, the mortgage guarantors linked to the federal government, will back mortgages up to $806,500 starting in 2025, their regulator said Tuesday. That’s an increase of 5.2%. Assuming a down payment of roughly 20%, the most expensive homes financed by those mortgages will cost nearly $1 million. It’s another milestone in a market that already feels sharply divided between Americans who own homes and those struggling to break in.
“I think it’s practical for (Fannie and Freddie) to meet the market where it’s at,” said Molly Goodman, co-founder of Abundant Housing Massachusetts, a housing advocacy organization. “We still need financial products that can serve the market, but we need to recognize that this is not sustainable.”
Updating what are known as “conforming loan limits” is a normal annual exercise for their regulator, the Federal Housing Finance Agency (FHFA.) The limits set the upper threshold for loans that can be backed by the two enterprises before borrowers must seek so-called jumbo mortgages, which can be a more onerous process.
“Having those loan limits raised helps a lot more people. It makes it a lot easier, especially for us as lenders,” said David Horvath, vice president and senior mortgage loan officer with Meridian Bank. Mortgages backed by Fannie and Freddie offer more flexibility for applicants on things like down payments and credit profiles than jumbo mortgages do, Horvath said.
