The federal government provides homeownership incentives based on the belief that there are benefits to society of having a high homeownership rate. For example, owners may have a greater attachment to their neighborhood than renters, and this could be reflected in better exterior home maintenance, greater civic participation, and more involvement with local schools. However, some analysts have questioned whether homeownership causes these behaviors, or is only correlated with them (that is, it may be that people who are already inclined toward greater civic participation are more likely to become homeowners). Critics of homeownership policies have argued that homeownership can make it more difficult for people to move to areas with better employment opportunities and places the risk of unanticipated repairs on the homeowner. Some have also argued that even if homeownership conveys certain benefits, it is not the federal government's role to intervene in housing markets, or that there may be more efficient ways for the government to advance these outcomes. Some recommend homeownership as a way to accumulate wealth, but others warn that house prices can decline, resulting in large losses to homeowners. One way in which the federal government supports homeownership is through programs that insure, guarantee, or directly provide mortgages to certain eligible homebuyers. These programs reduce or eliminate a lender's loss when a homeowner does not make the scheduled mortgage payments and may make lenders more likely to offer mortgages to certain borrowers that would otherwise not be well-served by the private market. In other cases, the programs may increase the amount of capital available for mortgage lending by bringing more investors into the mortgage market. This report analyzes the following four federal programs or entities that provide guarantees to lenders or investors on certain types of mortgages, and discusses the maximum mortgage amounts eligible under these programs: Fannie Mae and Freddie Mac, congressionally chartered government-sponsored enterprises (GSEs), purchase mortgages from companies that originate them. These purchases are subject to a maximum loan amount, which is higher in certain areas of the nation, but there are no limits on home value or income. The Federal Housing Administration (FHA), part of the Department of Housing and Urban Development (HUD), insures mortgages subject to a maximum loan amount. The maximum amount varies across the nation based on housing prices. The FHA fully guarantees the qualifying mortgages. There is no FHA income limit. The Department of Veterans Affairs (VA) guarantees mortgages taken out by veterans. There is a maximum guaranty amount, but not a maximum mortgage or income limit. The guaranty limit applies nationwide. The Department of Agriculture's Rural Housing Service (RHS) has two mortgage programs. One guarantees mortgages, and the other makes direct mortgages in rural areas. These programs have income limits and limits on the value of the homes purchased. Although there is some overlap, the four federal mortgage guarantee programs discussed in this report generally have different missions or target different populations. These differences are discussed in the " Possible Policy Considerations " section. The following sections summarize the limit on the dollar amount of a mortgage that is eligible for each of these programs. In addition to these size limits, the programs have other restrictions (such as minimum down payments) and eligibility criteria, but these are not addressed in this report. This section summarizes the limits on federal insurance, guarantees, and direct mortgages. Fannie Mae's and Freddie Mac's charters limit the maximum size of a mortgage that they can purchase. This limit is known as the conforming loan limit and is adjusted annually based on the Federal Housing Finance Agency's house price index (HPI), which, in turn, is based on a survey of average home price changes. There is a baseline limit for one-unit structures on the mainland United States and Puerto Rico, and high-cost areas have higher limits. The limits are higher for structures with two, three, and four units. By law, the conforming loan limit in Alaska, Hawaii, Guam, and the U.S. Virgin Islands is 150% of the baseline limit. The baseline limit is increased annually by the average increase in the HPI. High-cost area limits are recalculated at the same time. FHFA publishes conforming loan limits late in the year before they apply (e.g., conforming loan limits for calendar year 2017 were published in November 2016). Table 1 summarizes the 2017 conforming loan limits. This was the first increase in the limits since 2006. Table 2 shows the current one-unit conforming loan limit in selected high-cost areas. FHA insures certain eligible mortgages made by private lenders against the possibility of borrower default. If the borrower defaults on the mortgage, FHA will repay the lender the remaining principal amount owed on the mortgage. FHA insurance may encourage lenders to offer mortgages to borrowers who otherwise might not be well-served by the private mortgage market, such as borrowers trading lower down payments for higher monthly payments. In general, FHA serves many first-time homebuyers, low- and moderate-income homebuyers, and minority homebuyers. In order to be eligible for FHA mortgage insurance, a mortgage must not exceed a specified maximum loan amount that is set according to a formula specified by statute. The maximum loan amount varies by area and is set at 115% of the area median house price, subject to a national floor and national ceiling. That is, if 115% of the median house price in a given area results in a dollar amount that is below the floor, FHA can still insure mortgages with initial principal balances up to the floor in that area. If 115% of the median house price results in a dollar amount that is above the ceiling, FHA can insure only mortgages with a principal balance not greater than the ceiling. The floor and ceiling are calculated based on the conforming loan limit: By statute, the floor is set at 65% of the conforming loan limit, and the ceiling is 150% of the conforming loan limit (the same as the high-cost area conforming loan limit). The FHA ceiling for Alaska, Hawaii, Guam, and the Virgin Islands is the same as the conforming loan limits for those areas. The higher limits for two-, three-, and four-unit structures use the same percentage increases as the conforming loan limits. FHA announces the loan limits for specific areas for each calendar year late in the previous year, taking into account updated local house price data and any changes to the conforming loan limit. The FHA loan limits for 2017 were announced in December 2016 and were higher in many areas than in the previous year. For a one-unit property, the nationwide floor is set at $275,665 for 2017 (65% of $424,100), and the ceiling is set at $636,150 (150% of $424,100). The FHA loan limits for 2017 are summarized in Table 3 . In general, in areas where 115% of the area median home price exceeds the conforming loan limit, the FHA loan limits will be the same as the conforming loan limit. However, in lower-cost areas, the conforming loan limit will be higher than the loan limit for FHA-insured mortgages. In many of these counties, the FHA loan limits are set at the floor of $275,665 for calendar year 2017. Fannie Mae and Freddie Mac, in contrast, can purchase mortgages with principal balances up to $424,100 in these areas. The VA loan guaranty program assists eligible veterans by guaranteeing mortgages made by private lenders. Unlike conforming and FHA-insured mortgages, in many cases the VA program does not require the borrower to make a down payment. The VA loan guaranty is available for the purchase or construction of homes as well as to refinance existing loans. Under the loan guaranty, the VA agrees to reimburse lenders for a portion of losses if borrowers default. Although there is not a maximum loan amount for VA loans, the VA limits the guaranty that it will provide based on the amount of the loan. Where loan amounts are at or below $144,000, the VA guaranty ranges from 25% to 50% of the loan. A guaranty of at least 25% is important because if a lender wishes to sell a VA mortgage in the secondary mortgage market, the guaranty must cover at least 25% of the loan. For loans that exceed $144,000, the statute establishes a "maximum guaranty amount"—the maximum amount up to which the VA guaranty will equal 25% of the loan—that is tied to the conforming loan limits. The maximum guaranty amount is the lesser of 25% of the loan amount or 25% of the Freddie Mac conforming loan limits. If the amount of a loan exceeds the maximum amount at which the VA will guarantee 25% of the loan, a veteran may have to make a down payment equal to 25% of the amount over the loan limit to qualify for the loan. For example, if a veteran wants to purchase a $500,000 home in a county where the conforming loan limit is $424,100, the veteran may have to make a down payment equal to 25% of the amount over the loan limit ($18,975) to qualify for the loan. The second column in Table 1 lists the conforming loan limits, which the VA uses to determine the maximum guaranty amount for one-unit properties. The VA does not increase the maximum guaranty amount for properties with two, three, or four units, so the limits in column one of Table 1 apply for all one- to four-unit properties. The USDA's Rural Housing Service (RHS) administers a variety of housing loan and grant programs for rural residents authorized under the Housing Act of 1949. The Section 502 single-family direct and guaranteed home loan programs are the major home ownership programs. Unlike the other programs discussed in this report, the RHS programs have limits on the income of eligible borrowers.