Here is the chart showing the loan limit updates for the year 2023:

FHFA announced increases to conventional loan limits for 2023

What does this mean for borrowers?

Borrowers can benefit from the increases in loan limits mostly due to the fact that conventional lending guidelines are more forgiving than jumbo loan guidelines.  Any loan above the conventional loan limit falls into jumbo loan territory, and may be more difficult to qualify for.  For example, many jumbo loan products require at least 10% down payment and good to great credit scores.  Conventional loans require 3-5% down payment, and are far more forgiving in terms of FICO score.

These increases also mean that more cash is available to home owners who want to use conventional cash out refinance mortgages, and investors who want to purchase more expensive investment properties using conventional guidelines.

With home prices rising drastically year over year since 2020, these loan limits should help more borrowers access competitive financing terms , and help those in higher priced markets buy a home without an immense down payment.

1st Time Over $1 Million

2023 marks the first year FHFA will allow Fannie Mae & Freddie Mac backed conventional mortgage loans exceeding $1 million dollars in high cost markets for single family homes.  This will help buyers obtain loans to help buy homes in expensive metro areas or areas where median home values have exceeded the million dollar mark, without the need for an intimidating down payment.  To fully understand the benefit, take a competitive jumbo loan product and compare the down payment requirement on a $1.1M home.  With a competitive jumbo product requiring a 20% down payment, that’s a $220,000 investment (before closing costs!) to get into a home.  With a conventional loan product requiring just 5% down, the initial investment shrinks to $55,000, helping to make it easier to achieve the dream of home ownership in higher cost communities.

For more information, or to see what the loan limits are in your community, reach out to your MasonMac loan officer today!

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These changes represent an increase in area median home prices, and county changes are based on local rates of appreciation.  These changes should allow home buyers more flexibility and more favorable loan terms in areas where home prices have seen increases over the past year.  One major perk of using conventional financing is the ability to finance up to 95% of a home purchase, having only a 5% down payment requirement.  For some borrowers and situations, conventional loans require only a 3% down payment, making it possible to achieve the goal of home ownership without bringing in a larger down payment that many jumbo loan products require.

Another perk of conventional financing is competitive rates and mortgage insurance terms for those with excellent credit.  For those with good (but not exceptional) credit, conventional financing is another great option, since most jumbo financing options either require excellent credit (leaving those without excellent credit with minimal options), or coming with higher rates.

2022 loan limits are in effect for loans delivered to Fannie Mae & Freddie Mac in calendar year 2022, but loan applications can begin being processed under the new loan limits effective immediately.  Your MasonMac loan officer can further explain how the increase in loan limits may be able to assist you in getting better loan terms or qualifying for more home.

For an interactive map that shows loan limits for your specific county, you can click here .  If you have questions on how these loan limits can help you, or any other mortgage related questions, you can ask an expert here.

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Today, Fannie Mae & Freddie Mac released their updated loan limits for 2021.  Each year, maximum loan limits on conventional loans are adjusted based on median home values and the overall housing market.  For 2021, we’re seeing a 7.5% increase to conventional loan limits!  The new maximum loan limit nationwide will be $548,250!

What does this mean?

Well, conventional loans are the most popular mortgage loan options on the planet, offering low rates, flexible guidelines, and financing options for a wide range of borrowers.  BUT, these loans are only available up to a certain loan amount.  That means for people buying expensive homes that exceed these amounts, the result is often a larger down payment, higher interest rates, and tougher guidelines to qualify.  So an increase in loan limits means more people will have access to more expensive homes with more competitive financing products!

What about REALLY expensive areas?

One great function of FannieMae & FreddieMac is that they offer flexibility for those in more expensive markets.  Labeled “high cost” areas, Fannie and Freddie loan limits go BEYOND the loan limits for the rest of the country, allowing loan amounts all the way up to $822,375!  These increased “high cost” loan limits vary by county, and are based on the median home value within high cost markets.  For example, El Dorado county in California allows loan limits beyond the national limit, but below the maximum high cost county limits – coming in with a max loan limit of $598,000.

For home buyers?  Sellers?  Agents?

For those involved or soon-to-be-involved in real estate transactions, it’s important to note these limits could affect marketability – having a home price that lines up with low down payment options within conventional guidelines can open the door to many more buyers than if a home is priced primarily in the ‘jumbo loan’ range.  For example, now in 2021, home buyers can put 5% down and use conventional financing on a home priced as high as $577,105.  In 2020, the home price to allow the same access to financing would have been capped at $537,263.

This is tremendous for home buyers as well, because these increase comes with currently-historically-low rates.  So financing $548,250 today at today’s rates is actually CHEAPER on a monthly basis than it would have been to finance $510,400 with the higher rates the industry offered in late 2019-early 2020.  So not only can borrower’s afford more, but they can lock in loans today on more expensive homes with relatively low monthly payments due to the current rate environment.

FHA loans?  VA loans?  Others?

What about other loan types?  Limits haven’t been released yet for FHA loans, but they usually follow suit and adjust typically along with conventional limits, so we can expect about a 7.5% increase in FHA loan limits as well.  VA loans no longer have a loan limit, and other portfolio loans don’t follow conventional or government guidelines, so those loan limits and caps are established by each unique lender offering those products.

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