mortgage lenders in maryland

Government increases conforming mortgage limits for third year in a row

14.12.18

These limits are important to homebuyers because they accommodate the rising home prices and allow them to borrow more to the limit of what’s called a conforming loan. A lift in the limits is a way for buyers to keep pace with a more-expensive market.

“If house prices have gone up by 7 percent, then you need a 7 percent higher mortgage. It’s pretty automatic. Every time prices rise, the FHFA raises mortgage limits,” says Ed Golding, former FHFA commissioner.

The FHFA bases national conforming loan limits for mortgages that finance single-family homes based on their House Price Index report. In the latest report, the average U.S. home value between the third quarters of 2017 and 2018 increased by 6.9 percent. Hence, the corresponding rise in loan limits.

Homebuyers who desire mortgages that exceed the conventional loan limit need a jumbo loan. Jumbo loans are privately-backed mortgages that typically have more stringent underwriting rules, such as excellent credit scores. Since jumbo loans are not backed by the big agencies, lenders assume full responsibility, which heightens their risk. There’s no limit to the amount of a jumbo loan, but it will depend on your credit history, assets, and employment history.

Source: https://www.bankrate.com/mortgages/fhfa-loan-limits-2019/