Conforming Loan Limits Increases Due To Rising Home Prices
This BLOG On Conforming Loan Limits Increases Due To Rising Home Prices Was UPDATED On August 9th, 2019
This ARTICLE has been updated on August 9th, 2019.
The older content of this blog will remain below for archival purposes. The Federal Housing Finance (FHFA) has increased conventional loan limits to $484,350 for 2019. HUD has increased FHA Loan Limits to $314,827 for 2019. President Donald J. Trump has eliminated the maximum loan limit cap on VA Loans.
Fannie Mae and Freddie Mac have maximum conforming limits.
- The Federal Housing Finance Agency (FHFA) has increased conforming loan limits to $453,100
- This is the second increase two years in a row
- The rise in conforming loan limits for two consecutive years in a row was due to ever-increasing home prices nationwide
- HUD, the parent of FHA, followed FHFA conforming loan limits increase and raised FHA Loan Limits to $294,515
- HUD also increased FHA Loan Limits on FHA High-Cost Areas nationwide
- The FHFA, or Federal Home Finance Agency, is the decision-maker of conforming limits
In this blog, we will discuss the maximum conforming loan cap administered by the Federal Housing Financing Agency (FHFA).
What Is A Conforming Loan?
Conforming loans are conventional loans that conform to Fannie Mae and/or Freddie Mac Mortgage Guidelines:
- Conforming loans need to meet all of Fannie Mae or Freddie Mac lending guidelines
- This is including the maximum loan limit amount
- In order for Fannie Mae or Freddie Mac to buy the loan from lenders that originates and funds the mortgage loan, it needs to conform to their guidelines
If the loan does not conform to Fannie Mae or Freddie Mac guidelines, these two government-sponsored enterprises (GSE) will not purchases loans from lenders or financial institutions that originates and funds the loan.
Mortgage loans exceeding the conforming loan limits of $453,100 are non-conforming loans This is because they do not conform to Fannie Mae and Freddie Mac loan limit guidelines. Home Mortgages exceeding $453,100 is also called Jumbo mortgage loans.
- Jumbo Loans are mortgages that are not backed by Fannie Mae or Freddie Mac or any other government agency
- Jumbo lending guidelines depends on the individual lender
- They are often tougher and stricter than conforming lending guidelines
- Mortgage rates for Jumbo mortgages are often higher than traditional loans
- The debt to income ratio caps is often capped at 43% DTI
- Most Jumbo Lenders require borrowers to have at least 700 credit scores
- 20% down payment is often required for Jumbo Loans
- I have traditional Jumbo mortgage programs which only require 10% down payment
- However, a 740 credit score is required
- Gustan Cho Associates Mortgage Group has alternative finance loan programs on Jumbo Mortgages
Non-QM Jumbo Mortgage Programs has jumbo mortgages for self-employed borrowers with no tax returns required. Minimum credit scores of 500 FICO on Non-QM jumbo mortgages.
Increases In Conforming Limits In Certain Counties
As mentioned, the national conforming limits have increased to $453,100:
- However, the government has made exceptions to the national conforming lending limits in certain areas of the United States
- There are many counties in the United States where the median home values and prices exceed the national average home prices
- These areas are often designated high-cost areas
- A total of 234 areas in the country have been designated high-cost areas
- Many areas in California are designated high-cost areas
- Conforming loan limits in high-cost areas vary depending on the number of units
- For a single-family home, the maximum loan size is capped at $679,650
- For a two-unit home in a high-cost area, the loan limit is $870,225
- For a 3 unit home in a high-cost area, the loan limit cap is $1,051,875
- For a four-unit home in a high-cost area, the maximum loan limit is $1,307,175
The national conforming loan limit is capped at the following:
- $453,100 for single-family homes
- 580,150 for a 2 unit home
- $701,250 for a 3 unit home
- $871,450 for a 4 unit home
Cases When Home Buyers Need Higher Loan Limits
There are instances where home buyers need a higher-priced home and higher loan limits.
- HUD set maximum FHA Loan Limits at $284,515. Maximum Conforming Loan Limits is capped at $453,100
- Home Buyers who need higher-priced homes and higher loan amounts and want to avoid traditional jumbo mortgages can qualify with our non-QM loans and bank statement loans for self-employed borrowers
- There are no loan limits with non-QM loans and bank statement loans for self-employed borrowers
- 10% to 20% down payment is required and the amount of down payment required depends on borrowers credit scores
- There is no private mortgage insurance required with both non-QM and bank statement loans for self-employed borrowers
- There is no tax returns required on bank statement loans for self-employed borrowers
- There are no maximum loan limits on non-QM and bank statement loans for self-employed borrowers
For more information and qualify for a home loan with a direct lender with no mortgage overlays on government and conventional loans, please contact Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response.