Federal housing agency will not cut Fannie Mae and Freddie Mac loan limits, new director says

The newly confirmed director of the Federal Housing Finance Agency, Bill Pulte, who oversees mortgage giants Fannie Mae and Freddie Mac, said he will not lower the conforming loan limit, or the maximum value for the loans the two firms will buy and guarantee.

That limit is calculated each year according to current home prices. It now stands at $806,500, an increase of $39,950 (or 5.2%) from 2024.

“There are no plans to do anything as it relates to the conforming loan limit,” Pulte said Tuesday.

The Trump administration has touted plans to reduce the federal government, and many have expected it will work to shrink the size of Fannie Mae and Freddie Mac. The mortgage giants guarantee the vast majority of the nation’s $12 trillion mortgage market.

“Those close to it see a reduction in loan limits appeasing the populists irritated that the government is insuring million dollar mortgages, when in reality there’s ample supply of capital from banks and non-banks to support that activity,” said Eric Hagen, managing director and mortgage finance analyst at BTIG. “The question is how much mortgage rates for jumbo borrowers might need to increase to support it, all of which could be highly sensitive to timing and interest rates.”

The FHFA has overseen the two firms since they went into conservatorship in 2008. With the recent appointment of Pulte, questions have been swirling about what he intends to do with the two, including if he would move to lower their conforming loan limits. Pulte toured Fannie Mae and Freddie Mac offices last week, posting on social media a video of empty offices, desks and even the cafeteria.

In a recent report, the CATO Institute, a Washington, D.C.-based think tank, pushed the idea that Congress should limit the FHA’s single-family insurance portfolio to first-time homebuyers.

“Additionally, the FHA should decrease the value of loan limits eligible for FHA single-family mortgage insurance to (at most) the first quartile of home prices,” the report said.