The maximum conforming loan limit for mortgages to be acquired by Fannie Mae and Freddie Mac will increase by almost 7.5 percent in 2021.

The Federal Housing Finance Agency said in a statement Tuesday that the loan limit for one-unit properties will increase from $510,400 in 2020 to $548,250 in 2021, a 7.42 percent increase.

Because of median home values, Fairfield County will have a higher limit.

The FHFA adjusts the conforming loan limit annually to reflect the change in the average U.S. home price, as required by the Housing and Economic Recovery Act (HERA). Conforming loan limits had remained stagnant for a decade, but since 2016, the limit has increased each year.

The baseline maximum conforming loan limit in 2021 will increase by the same percentage as the FHFA’s estimated housing price increase. Using its third quarter 2020 House Price Index report, the FHFA calculated the increase based on estimates of the average U.S. home value over the last four quarters. According to FHFA’s seasonally adjusted data, house prices increased 7.42 percent between the third quarters of 2019 and 2020.

Fairfield County will have a higher maximum limit because 115 percent of the local median home value exceeds the baseline limit. Many high-cost areas in the U.S. saw median home values rise in 2020, driving up the maximum loan limits in these areas, according to the FHFA.

Fairfield County’s conforming loan limit in 2021 will be $601,450.

Source: FHFA

A wider pool of people will now qualify for conforming mortgages, possibly benefiting first-time homebuyers. Conforming mortgages financed by government-sponsored entities and the FHFA are the most lenient, allowing eligible first-time homebuyers to put down as little as 3 to 5 percent in some cases. Jumbo loans, on the other hand, require borrowers to have higher FICO scores and larger down payments, and also come with asset and reserve requirements.