The Federal Housing Finance Agency just released the new 2018 national loan limits. These loan limits provide increases in most counties throughout the United States. Here’s how the changes will benefit you when buying or refinancing a home.
The loan limit increase changes the conforming loan limit from $424,100 to $453,100. This increase allows for getting a lower-priced mortgage since the most aggressive types of mortgages in terms of rate and pricing typically tend to be within conforming loan limits.
The FHFA has also increased high balance loan limits in most areas throughout the United States. Looking at Sonoma County, California for example the maximum loan was $595,700 and now that loan limit is $648,600 for 2018. This additional $45,000 plus of spending power means you can get conventional financing on a bigger mortgage loan size. Put another way, a bigger loan limit means you can still stay within conforming mortgage lending requirements avoiding jumbo mortgages. Jumbo mortgages have tighter debt to income ratio requirements at 43%, require ultra-high credit scores, along with large income and significant assets in the back.
The FHFA’s decision to increase loan limits nationwide points to a broader trend in rising incomes leading towards greater housing prices. People purchase houses when they’re feeling good about their jobs and financial future. The two factors that drive housing prices bar none is job growth and low unemployment.
These changes will likely be the catalyst for the FHA to follow suit in the coming weeks. Typically, but not always the FHA mirrors county maximum loan limits for Fannie Mae and Freddie Mac mortgages.
These changes will make it easier to qualify for mortgages for borrowers whose income and financial pictures do not support the banking requirements most jumbo mortgage investors seek.
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