2021 Loan Limits On Government And Conventional Loans

This ARITCLE Is About 2021 Loan Limits On Government And Conventional Loans

The housing market is booming. Home prices have gone up substantially year after year for the past ten years.

  • There is no sign of any housing market correction
  • Both HUD and the FHFA has increased FHA and Conforming Loan Limits for the past five years due to rising home prices
  • Every calendar year the lending agencies such as FANNIE MAE, FREDDIE MAC, USDA, FHA, and VA change their maximum loan amount guidelines
  • Loan limit information is gathered over a 12 month period and adjusted annually
  • In this article, we will detail when these changes will go into effect for each agency
  • We will also detail how you can apply for a loan with Gustan Cho Associates

2021 Loan Limits On Government And Conventional Loans Increases Again Due To Skyrocketing Home PricesSkyrocketing Home Prices

If you have been following our blogs, you have more than likely already seen the loan amount increases on conventional mortgage lending and FHA.

  • For 2021, the maximum conforming loan limit in the US will be $548,250
  • The maximum loan amount for FHA will be $356,362
  • This is in your standard counties across the country and not high price areas
  • These increases were put into effect based on the previous 12 months of available data
  • The measurement used to create loan limits is based on the home price index or  HPI
  • Over the past 12 months we saw a 7.42% increase across the nation
  • This is a good sign for the housing market
  • This increase means real estate values are up nationwide
  • In some areas of the country the increases have been higher than normal
  • Even during the COVID-19 coronavirus outbreak, it’s a good sign to see increases throughout the housing market
  • While some areas of the country have decreased, the home price index is based on a nationwide average

For more information on these increases, please see our blog on FHFA 2021 LOAN LIMITS 

When Does The New 2021 Loan Limits Take Effect

When can a client utilize the increased loan limits?

  • This is a good question, and it varies per agency
  • Each agency has their own timeline of when these increases will go into effect
  • Conventional mortgages already allow the increased loan amounts as long as the lock rate is valid through January 4, 2021
  • This is true for Fannie Mae loans submitted through desktop underwriter (DU) prior to December 12, 2020.
  • Those findings receive an approve/ ineligible recommendation when only ineligible due to exceeding the 2020 loan limits
  • As long as the loan amount is within DU compliance with the applicable 2021 loan limits, the AUS can be submitted or resubmitted on or after December 12, 2020
  • Same is true for Freddie Mac
  • A loan submitted through loan prospector (LP) prior to December 13, 2020 that received in accept/ ineligible recommendation only due to loan amount exceeding the 2020 loan limits are acceptable
  • This only holds true as long as the loan amount submitted complies with the applicable 2021 loan limits
  • 2021 loan limits will be applied to all case files submitted on her after December 13 for Freddie Mac
  • What this means is you may already utilize the 2021 loan limits on all conventional mortgage loans

Anything over the 2021 low ma’am it will still fall into the JUMBO mortgage category which have completely different qualifications.

Conventional Versus FHA Loans

Since the Federal Housing Finance Agency announced the loan limits for 2021, we have received numerous phone calls from clients asking when they will be able to utilize the higher loan amount thresholds.

  • For FHA loans you cannot close until 2021
  • FHA loan limits are based off the FHA case assignment date and that new loan limit only applies to case numbers submitted on or after January 1, 2021
  • FHA case numbers must be honored after that date or the 2020 loan limit will be applied
  • If your automated underwriting system findings were submitted before this date, the loan is NOT eligible for funding with the higher loan amounts
  • This is incredibly important if you need the higher loan limits
  • A new file and case number must be started and assigned after New Year’s Day 2021

If this is unclear, please call Mike Gracz on 630-659-7644. Mike will be able to provide clarification as well as the loan limit for your specific County. You may also email [email protected].

No Maximum Loan Limit Cap On VA LoansLimit Cap On VA Loans

As most veterans are aware, there are no longer loan limits for VA mortgage lending.

  • Blue Water Navy Vietnam Veterans Act of 2019 got rid of loan limits at the beginning of 2020
  • President Donald Trump signed this act into law in July 2019
  • However, VA entitlement is still important for VA mortgage lending
  • New loan limits for each county will go into effect after January 1, 2021
  • Entitlement is calculated based off the county limits which will go into effect on this date
  • Although the VA has not officially announced the maximum guarantee amount for these transactions, any loan needing to use the new loan limits must close on or after January 1, 2021

For more information on entitlement and VA mortgage lending, please call Mike Gracz 630-659-7644.

2021 Loan Limits On USDA Mortgages

USDA lending is slightly different.

  • As of today, USDA lending does not have a maximum mortgage limit
  • Instead, USDA loans has limits on income and the value of the home
  • There are no specific automated underwriting or loan delivery requirements that apply for loan limit purposes for USDA mortgages
  • USDA mortgages can be a bit tricky

If the home is in a USDA eligible area, you will want to utilize USDA ELIGIBILITY MAP to make sure your income and value of the home are within the allowable thresholds.

2021 Loan Limits On FHA Loans Take Effect January 1st, 2021

If you already have a mortgage loan in process that could be outside of the 2020 loan limit but inside of the 2021 limit, you will need to start the transaction over. A new loan file must be disclosed to you. As mentioned above, if this is an FHA mortgage loan, you will need to apply after the new year to utilize the higher limits. The case number cannot be assigned down the road.

Cash-Out Refinance Mortgage Transactions

What is a Cash-Out Refinance Mortgage

Cash out refinances – If you are in the market for a cash out refinance, the conventional route will already allow you to utilize the higher loan limit thresholds. Please remember, in order to utilize the higher FHA loan limits, you must wait to apply till January 1, 2021. This low mortgage rate environment is a great opportunity to pay off consumer debt, take out money for investments, or even buy an investment property. As the country goes through the COVID-19  turmoil, the housing market looks like it should stay strong. This could be a great opportunity to buy a foreclosed property or a multi-unit investment property. For more information on cash out refinances, please give us a call today.

When Should I Start Preparing To Qualify For A Mortgage With A Lender

Applying for a mortgage with the 2021 loan limits and Gustan Cho Associates is an easy process.

  • Technology is a huge factor in the mortgage industry and has simplified mortgage applications
  • We are here to assist you seven days a week
  • The first step to applying for a mortgage is to call Mike Gracz on 630-659-7644 and have a one on one customized mortgage consultation
  • You and Mike will go over everything from your credit profile, available down payment, monthly budget, and timeline for closing on your new home
  • After your one on one mortgage consultation, Mike will pair you with a licensed loan officer in your state
  • Your loan officer will send you an application link to start the process
  • That loan officer will request the required documentation based on your sources of income and loan product
  • Once you send in the required documentation and your loan officer has your credit report verified, you will then be able to go over specific qualifications
  • Based on your debt to income ratio, credit score, and down payment available, a preapproval letter will be issued
  • If for some reason you do not qualify today, your loan officer will come up with a customized financial plan to qualify for a home as soon as possible
  • Buying a home is a big step and we want to make sure you buy the home of your dreams and not settle for anything less

The team at Gustan Cho Associates have worked with many clients for well over a year before they buy the right home for them.

Choosing A Mortgage Company Licensed In Multiple States With No Lender Overlays

We encourage you to follow our blogs as mortgage information is released all the time. Every year dramatic changes going to affect it could make or break your qualifications. It is important to select a loan team who is up to date on their guidelines. As mentioned above, we are available seven days a week. Even if you have been turned down in the past, we may be able to help. The Gustan Cho Associates are able to lend without mortgage LENDER OVERLAYS. With the COVID-19 coronavirus outbreak, most lenders have added requirements to their mortgage products. Luckily, we have not. We look forward to hearing from you with any mortgage related questions and are here to help you and your family.

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