Conforming Loan Limits Increased for 2017

By
Mortgage and Lending with American Pacific Mortgage NMLS1447810/ /1850 /0805

New maximum loan limits were announced by the Federal Housing Finance Agency for conforming loans. The loans will vary by county, but for most of the United States, the 2017 maximum loan limit for one-unit properties will be $424,100, an increase from $417,000 (the level set back in 2006).

This will be the first increase in the baseline loan limit since 2006. In higher-cost areas, higher loan limits will be in effect. In high-cost areas the ceiling loan limit was raised to $636,150 (equivalent to 150 percent of the maximum baseline). High-cost areas are defined as areas where 115 percent of the local median home value exceeds the baseline loan limit.

 

Effective January 1, 2017, the maximum conforming loan limits will be:

APMLoanLimits.png
 

What is a loan limit?

A loan limit is exactly what it sounds like. It is a limit on how much you can borrow for a home. Limits are set by the Federal Housing Finance Agency (FHFA) and are different depending if the loan is conventional or an FHA loan. 
 

What is a conforming loan?

Conforming loans meet certain guidelines set forth by Fannie Mae and Freddie Mac, including the size of the loan. In addition to the size limit, conforming loans must also meet guidelines regarding a borrower's debt-to-income ratio (DTI). Non-conforming loans generally have higher interest rates and may carry additional fees or insurance requirements.
 

What does this mean for borrowers?

Raising the conforming loan limits will make more borrowers eligible for purchasing a home. Conforming loans are the friendliest loans for borrowers. They typically have lower down payment requirements, lower interest rates and more flexible qualifying criteria as compared to non-conforming or Jumbo mortgages.

For example, Jumbo mortgages generally require a 15% or 20% down payment to qualify. With a down payment being a large variable to homeownership, the new conforming loan limits will enable more homebuyers to enter the market.
 

What prompted this change?

The loan limits were raised as a result of higher home prices nationwide. Home prices were 1.7% higher in the third quarter of 2016 than during the same period in 2007, according to the FHFA’s Home Price Index. This prompted an equivalent 1.7% increase in the conforming loan limits.


To find out if you qualify for a conforming loan give me a call (818) 263-7467 or simply click here: get pre-approved now.

 

 

 

 

Comments (2)

John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Dave Parker Thanks for the very good report on conforming loan limits for 2017.

Dec 19, 2016 06:25 PM
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

 The baseline limit, which affects most markets, will increase by 6.8% to $453,100. Loan limits in markets designated as "high cost areas" like mine, will increase to $679,650.

Nov 29, 2017 11:49 PM

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