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 U.S. home price.  Earlier today, FHFA published its third quarter 2018 House Price Index (HPI) report, which includes estimates for the increase in the average U.S. home value over the last four quarters.  According to FHFA’s seasonally adjusted, expanded-data HPI, house prices increased 6.9 percent, 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 (like Santa Cruz) in which 115 percent 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 percent 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 (such as Santa Cruz) will be $726,525 — or 150 percent of $484,350. 


Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam, and the U.S. Virgin Islands.  In these areas, the baseline loan limit will be $726,525 for one-unit properties.

As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.


The Federal Housing Finance Agency regulates Fannie Mae, Freddie Mac and the 11 Federal Home Loan Banks. These government-sponsored enterprises provide more than $6.2 trillion in funding for the U.S. mortgage markets and financial institutions.


Rates for mortgages in conforming range are normally about 0.25% better than High Balance mortgage rates. Both conforming and high balance loans (compared to Jumbo Loans) are regularly easer to qualify for, more forgiving if borrowers do something they should not (for example cash deposits or acquiring new debt) and usually carry less restrictions on property compared to Jumbo loans.


Here is a quick comparison along with the breakdowns for the surrounding counties. Please feel free to reach out to our Santa Cruz Home Loan Advisor for any specific questions.  These new increases home home loan limits will help many buyers of Santa Cruz Real Estate achieve their dream of home ownership.


Surrounding counties new 2019 Limits:


Santa Clara, San Benito counties:


$484,350 Conforming

$726,525 High Balance


Monterey County:


$484,350 Conforming

$652,050 High Balance