Fannie Mae is doubling its loan limit for small multifamily mortgages in an effort to ensure an increased affordable housing supply.
Effective immediately, the government-sponsored enterprise's small loan limit is now $6 million, doubling the previous limit of $3 million or less nationwide and increasing the limit for certain high-cost areas by $1 million.
Fannie Mae said in a statement that the loan size increase will simplify the definition of a small loan and provide more opportunities for borrowers to realize the benefits of streamlined third-party report, underwriting and asset management requirements.
“Increasing the loan limit for our small mortgage loan program will provide more capital and liquidity to the small loan marketplace and help address the significant affordable workforce housing supply issues facing our country today,” said Michael Winters, VP of multifamily customer engagement. “Our commitment to providing sustainable financing solutions that enhance affordability, security, and convenience of financing smaller properties plays an important role in securing a key source of housing for working families.”
Additionally, Fannie Mae announced it has added several new markets that are eligible to receive certain pricing and underwriting benefits. The newly-eligible MSAs are Denver, Miami, Minneapolis, and Salt Lake City.
According to Fannie Mae, those markets have shown "credit and economic performance that is comparable" to Fannie Mae’s other eligible MSAs, which include Baltimore; Boston; Chicago; Los Angeles; New York City; Oxnard, California, Philadelphia; Portland, Oregon, Sacramento; San Diego; San Francisco; San Jose; Seattle; and Washington, D.C.
The increase in the loan limit comes after Fannie Mae led the affordable housing market in 2018 with overall production of $7.4 billion, a 9% increase from 2017.