Fannie Mae, Freddie Mac Will Back Home Loans of Nearly $1 Million

The federal government is set to back mortgages of nearly $1 million. 

The maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac are expected to soar in 2022, a reflection of rapid home-price appreciation over the last year, per the Wall Street Journal.

The increase may make it easier and cheaper for some borrowers to buy a home, especially in more expensive areas of the country. But, the higher limits are also likely to increase debate about how big of a mortgage is too big for government-backing. 

By law, the loan limits are updated each year using a formula that considers average housing-price increases nationally. Currently, mortgage companies can back single-family mortgages that have balances as high as $548,250 in most parts of the country and up to $822,375 in expensive housing markets like California and New York.

Those limits are expected to skyrocket to $650,000 in most parts of the country and just under $1 million in expensive markets. 

The exact limits are set to be announced on November 30 and the new limits will go into effect in January.