The Federal Housing Finance Agency recently announced a new baseline conforming loan limit for Fannie Mae and Freddie Mac in 2021: $548,250.

This means that you can now borrow an additional $38,150. This can get you a house with more square footage, more land, better finishes, or in a more desirable location. Homes and/or areas that were out of your price range previously might be within reach without needing to increase down payments. It could mean getting the kitchen of your dreams.

This is a 7.5% increase from 2020’s limit of $510,400. The FHFA increased the Fannie and Freddie conforming loan limits in 2016 for the first time in 10 years. There have been increases annually since then pushing the baseline loan limit up by $131,250. For high-cost areas, where 115% of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit is now higher than the baseline loan limit.

What about home values? Median home values generally increased in high-cost areas in 2020, 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 $822,375 — or 150% of $548,250.