FHFA Increases Conventional Loan Limits for Home Purchases in 2018
• For the second consecutive year, federal regulators have increased the amount of money potential home buyers can borrow on conforming mortgage loans.
• Increase of $29,000 to $453,100 from $424,100 in 2017 allows American homebuyers to compete in the rising home price (nearly 7%) market without venturing into stricter jumbo loan territory.
• High-cost area limits also set to increase to $679,650
- - - For the second consecutive year, the Federal Housing Finance Agency (FHFA) has raised the maximum loan amount on loans that qualify for purchase by Fannie Mae and Freddie Mac. These conventional or "conforming" loans are considered less risky for lenders, allowing for lower down payments and often lower interest rates for qualified buyers.
The current conventional loan limit is $424,100. Loans exceeding that limit are considered "jumbo" mortgages and typically require larger down payments and more stringent underwriting. The current limit to stay out of "jumbo" territory is set to increase by $29,000 to just over $453,100 starting January 1, 2017.
For high-cost areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan will be set higher than the baseline loan limit. The new ceiling loan limit in most high-cost areas will now be $679,650.
These increases, in response to a reported 6.8% increase in home prices in 2017, have many real estate experts predicting the changes will have a positive impact on the number of home buyers who will still be able to buy a home by staying within the lower down payment loan programs.
As industry experts look into the new year, Arizona is again expected to be one of the hottest real estate market in the nation. These limit increases on conventional and FHA products may give Arizona home buyers the buying power they need to make a purchase in 2018. - - -
For more information on conventional and FHA Loan programs or to apply, contact a Fairway Independent Mortgage Branch near you to speak with an Arizona licensed loan officer.
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