It was just announced that the Federal Housing Finance Agency (FHFA) has increased the conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac.
The new baseline conforming loan limits will be in place to start 2018. The amount will go up from $424,100 to $453,100. And that goes for all states.
Housing Market Strength
First off, this is a great sign in the continued growth in the housing industry. The loan limits were set at $417,000 during the Housing Economic Recovery Act of 2008 (HERA), which mandated that the baseline loan limit could not rise again until home prices returned to their pre-decline levels. Now that the limit has been increased these past two years, it shows just how much median home prices have gained in value. Last year was a fairly small increase, but this new limit is a major jump up. It reflects the average national property value increase of 6.8% between the third quarter of 2016 and the third quarter of 2017.
The baseline limits noted above are for low and average markets. However, San Diego County is what the FHFA considers a “high-cost area,” along with most other Southern California markets. This means that a ceiling is set on the baseline loan amount of up to 150%.
- San Diego the new limit is $649,750 (up from $612,950 in 2017)
- Los Angeles and Orange Counties will be $679,780 (up from $636,150 in 2017)
*Loan limits go even higher for multi-unit properties.
Mortgage Industry Impact
Not only is this a sign of economic growth in the housing industry. It is also good news for the mortgage industry because it will enable more people to qualify for conventional and government-insured home loans. It also means fewer mortgage loans will be categorized by the government regulators as “jumbo loans.” These jumbo loans are typically only approved by larger banks, which thus limits the lending options for consumers.
With more of these loans now being considered conventional or government-insured, independent lenders like Transparent Mortgage will be able to provide loans to more people. As a borrower, you’ll be able to “shop around” and get the best terms or work with a more local mortgage broker that you can trust to protect your best interests. A lot of consumers are wary of dealing with the big banks on jumbo mortgage loans.
Get Started with Your Home Loan
To learn more about how these FHFA loan limits affect you or to get started on your home loan application, give me a call at (619) 929-0199. My priority is helping people make the right decisions when it comes to their mortgage loans, so my team and I will provide the information and insight you need to do what’s best for you and your family when buying a home or refinancing.