Each year in November, the Federal Housing Finance Agency (FHFA) announces new conforming lending limits that will be in effect for the upcoming year, giving prospective home buyers a reference on how much they can borrow in a conventional loan. But this year, it appears that lenders are not waiting for the FHFA to announce their limits and are jumping ahead and raising their limits immediately.

In the past year, the FHFA raised the loan limits to $548,250 for most of the country, an increase from $510,400 the previous year. In 2020, high-cost areas will be able to borrow with a higher conventional loan limit of 150% of the traditional limit, meaning that in 2021, a conventional loan limit of $822,375 will be available in high-cost areas as Alaska or Hawaii.

Many lenders have already begun setting new limits by estimating the FHFA's limits based on estimated home price increases in 2021. Several of the largest mortgage lenders in the United States have raised their conventional loan limits to a maximum of $625,000, including Geneva Financial Home Loans, Caliber Home Loans, PennyMac and United Wholesale Mortgage (UWM).

You can get a higher mortgage loan amount at a lower interest rate if you are interested in buying a home through a conventional loan. You can also visit the official website of Credible, where you can get a personalized rate without affecting your credit score at all.

While interest rates are low, lenders battle to keep the market competitive.

Upon announcing it would raise loan limits ahead of the FHFA's announcement in November, UWM explained the move will allow brokers to get borrowers into bigger loans at higher prices as the housing market soars. Other lenders expressed similar sentiments.

Typically, borrowers need a down payment of at least 3% for a first-time homebuyer or 5% for others with a minimum credit score of 620 for a single-family home in order to qualify for a conventional loan. It is important to note that conventional loans have more allowances than other mortgages, such as FHA mortgages or Department of Veterans Affairs (VA) loans. It has been reported that when borrowers have built up at least 20% equity in a home, private mortgage insurance (PMI) is no longer required to be paid.