The federal regulator overseeing Fannie Mae and Freddie Mac plans to reduce their loan limits by Jan. 1, the Wall Street Journal reports. In most parts of the country, the “conforming loan limit” is $417,000. Fannie and Freddie can back loans of up to $625,000 in higher-priced markets, and up to $721,050 in Hawaii.

The Federal Housing Finance Agency, which maintains that it does not need congressional approval to reduce loan limits, told the Journal in a statement that a “gradual reduction in loan limits is an appropriate and effective approach to reducing taxpayers’ mortgage-risk exposure … and expanding the role of private capital in mortgage finance.”

On his blog Calculated Risk, Bill McBride charts the conforming loan limit against three home prices going back to 1980. While the limit was adjusted regularly as home prices increased, it’s held at $417,000 since 2006. If the limit had been allowed to fall with home prices, McBride thinks it would be around $385,000.

“I suspect the high cost limit (of up to $625,000 in most high-cost markets) will be continued and will remain close to the current level,” McBride writes.

Congress had authorized Fannie and Freddie to venture into what had previously been considered “jumbo loan” territory in 2008, after the secondary market for mortgages not backed by the government collapsed.

The Federal Housing Administration continues to provide insurance to lenders on mortgages with limits that vary from $271,050 to $729,750, depending on home prices at the county level. Source:

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription