Fannie Mae & Freddie Mac have just announced their new Conforming and High Balance Conforming Loan Limits for 2021. If you are a Realtor, Financial Planner and/or Attorney, do you know how to articulate this great news to your Clients? Here are a few talking points:
There are 3 categories of loan types (based on the LOAN AMOUNT)
- High Balance Conforming
- Non-Conforming (Jumbo)
The loan amounts have increased on each category as follows:
- Conforming was $510,400, increasing to $548,250 in 2021
- High Balance Conforming limits vary significantly depending on county (see below for a few examples)
- Non-Conforming (Jumbo) limits vary depending on county as well (as shown below)
Examples of New High Balance Conforming Loan Limits by County
- San Diego was $701,500, increasing to $753,250 in 2021
- Orange County was $765,600, increasing to $822,375 in 2021
- Los Angeles was $765,600, increasing to $823,375 in 2021
- Riverside County was $510,400, increasing to $548,250 in 2021
Locate your county by CLICKING HERE to access an interactive map of the 2021 Conforming Loan Limits across the Country.
NOTE: Loan Amounts in excess of High Balance Conforming Loan Limts are considered "Non-Conforming" (aka "Jumbo")
Borrower Benefits for New 2021 Mortgage Conforming Loan Limits:
Typically, "Conforming" loan amounts offer the most attractive pricing (combination of interest rate and acquisition costs)
- With a higher Conforming limit, there are more Borrowers who qualify for the most attractive pricing options
Non-Conforming (Jumbo) loans often have a maximum of 43% Debt-to-Income (DTI) Ratio (where Conforming & High Balance Conforming can sometimes go as high as 50% DTI)
- With a higher Conforming limit, there are more Borrowers who can push to higher DTI Ratios (when applicable and desired)
Non-Conforming (Jumbo) loans often have "cash reserve" (aka "post closing liquidity") requirements to show additional assets after all Funds-to-Close have been brought in to buy the home (or "verified assets" for refinances).
- In some cases, Borrowers are declined due to lack of assets on Non-Conforming (Jumbo) loans
- With a higher Conforming limit, there are more Borrowers who can reach higher loan amounts without having extra assets
Additional benefits exist, but suffice to say, the new 2021 Conforming Loan Limits are great news to all Borrowers, Home Buyers, Attorneys, and Real Estate Agents.
Divorcing Homeowners may benefit from these changes!
Divorcing Homeowners seeking Equity Buyouts (whereby one spouse retains the marital home and "buys out" the departing spouse) may also benefit from these 2021 Conforming Loan Limit increases as equity and/or cash-out restrictions may now allow for larger buyouts. CLICK HERE to learn a few valuable mortgage tips for Divorcing Home Buyers & Homeowners.
Feel free to contact me for details and/or scenarios.