New Conforming Loan Limit: How will it affect you!

The government just increased the conforming loan limits and here is everything you need to know about it.

What is a conforming loan?

A conforming loan. It has to do with the sizing of your mortgage amount, and it depends on the county. It is when a mortgage meets the dollar limit set by the Federal Housing Finance Agency (FHFA) along with the funding criteria of Freddie Mac and Fannie Mae.

Here are a few key takeaways from Investopedia involving Conforming Loans: https://www.investopedia.com/terms/c/conformingloan.asp

• A conforming loan is a mortgage with terms and conditions that meet the funding criteria of Fannie Mae and Freddie Mac.

• Conforming loans typically offer lower interest rates than other types of mortgages.

• Lenders prefer to issue conforming loans because they can be packaged and sold in the secondary mortgage market.

What are the changes?

The government just announced that they raise the conforming limit to $726,200 (a 12.21% change from the previous year) for loans backed by Fannie Mae, Freddie Mac and soon to be actually government mortgages as well (FHA, VA). For the first time, the government’s going to back mortgages on a one family house over $1,000,000 and a four family house over $2 million.

How’s it going to affect you?

So, it’s going to give buyers the opportunity of getting a better, lower interest rate as you go up in price, which of course increases the affordability on the higher end market. This is going to be great for someone selling their current house and upgrading, getting something a little bit larger. Giving them the opportunity for a little bit higher purchasing power.

If you’re a home buyer in the market, seeking that home upgrade. Now may be a great time to make your move.