In the residential mortgage industry, there are conforming loans (lower rates) and non-conforming loans (higher rates). Conforming loans adhere to rules set by the government agencies Fannie Mae, Freddie Mac and Ginnie Mae. More than 90% of residential mortgages are backed by these agencies. They set the amount on the loans they are willing to back based on home prices in each area. This means that, as home prices rise, so will loan limits. For the third straight year, the Federal Housing Finance Agency (FHFA) has increased the limits that cover the vast majority of home loans issued in the U.S. In 2019 the limit rose 6.9% from $453,100 to $484,350 everywhere except for 47 counties.
Nantucket is a designated high cost market (with an average home price over $2,000,000) and, as a result, the maximum loan limit is 150% higher here. In 2019 the limit was raised 6.9% from $679,650 to $726,525. This is especially significant because it enables entry level buyers to obtain conforming financing.
We can thank local Nantucket bankers for their efforts to raise the limits as well as Barney Frank, then Senator from Massachusetts, who advocated successfully to make these higher limits permanent in expensive markets such as Nantucket.