Baseline Limit for Hawai‘i Homebuyers Increases

News Release from Homebridge Financial Services, Inc.

The Federal Housing Finance Agency has increased the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019, according to a recent announcement by Homebridge Financial Services in Hawaiʻi.

In most of the US, the 2019 maximum conforming loan limit for one-unit properties will be $484,350, an increase from $453,100 in 2018. Special statutory provisions establish different loan limit calculations for places like Hawai‘i, Alaska, Guam and the US Virgin Islands. In Hawaiʻi, the baseline loan limit will be $726,525 for one-unit properties.

“This change will allow homeowners to take advantage of higher loan amounts without the higher interest rates or stricter underwriting guidelines,” explains Homebridge Maui’s Faith Armanini. “In the past, on most islands, we have had a conforming loan limit and a high balance loan limit. Guidelines for conforming and high balance varied some and rates were higher on the high balance loans than the conventional. With this recent announcement there will now only be one conforming loan cap amount of $726,525 statewide for one-unit properties for Fannie Mae and Freddie Mac programs.”

Baseline limit

The Housing and Economic Recovery Act (HERA) requires that the baseline conforming loan limit be adjusted each year for Fannie Mae and Freddie Mac to reflect the change in the average US home price. The FHFA published its third quarter 2018 House Price Index report, which includes estimates for the increase in the average US home value over the last four quarters. According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 6.9%, on average, between the third quarters of 2017 and 2018. Therefore, the baseline maximum conforming loan limit in 2019 will increase by the same percentage.

High-cost area limits

For areas in which 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit will be higher than the baseline loan limit. HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling” on that limit of 150% of the baseline loan limit. Median home values generally increased in high-cost areas in 2018, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525—or 150% of $484,350.