The federal government is about to back mortgages of nearly $1 million for the first time, the Wall Street Journal reported. The maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac is expected to jump sharply in 2022, a reflection of the rapid appreciation in home prices nationally over the past year. The increase may make it easier and cheaper for some borrowers to buy a home, particularly in more expensive areas of the country, but the higher limits are also likely to elevate debate about how big of a mortgage is too big to be backed by the government. “Housing prices are expensive,” said Steve Walsh, president of Scout Mortgage in Scottsdale, Ariz., adding that some of his clients are unable to qualify for loans for modest-sized homes under the current limits. “I don’t believe these people are looking for a castle, just a three-bedroom house with a backyard,” Mr. Walsh said. By law, the loan limits are updated annually using a formula that factors in average housing-price increases nationwide. Currently, the government-controlled 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, including parts of California and New York.
