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Update: Conforming Loan Limits Increased for 2017
On November 23, the Federal Housing Finance Agency (FHFA) announced that it would raise the baseline conforming loan limit for 2017. They are also increasing the limits for certain “higher-cost areas” that are above the baseline. This is in response to significant home-price gains that occurred during 2016.
In most counties across the country, the 2017 maximum conforming loan limit for a single-family home will be $424,100. Th ...at’s an increase of $7,100 from the 2016 baseline limit of $417,000. This is the first time federal housing officials have raised the baseline since 2006.
But again, this is just the baseline conforming loan limit used for most parts of the country. In higher-cost real estate markets, like San Francisco and New York City, the limit for a single-family home loan can be as high as $636,150.
Anything above these caps is considered a jumbo mortgage.
What Is a Conforming Loan?
A conforming home loan is one that meets, or “conforms” to, certain guidelines set forth by Freddie Mac and Fannie Mae.
Freddie and Fannie are the two government-sponsored enterprises (GSEs) that purchase mortgages, bundle and securitize them, and then sell them to investors through Wall Street and other channels.
When a loan meets the purchasing criteria used by the GSEs, it is said to be a conforming loan.
There are various criteria used to define a “conforming” mortgage product. But the size of the loan is one of the most important criteria, from a borrower’s perspective.
Freddie Mac and Fannie Mae will only purchase loans up to a certain amount. These maximum amounts, or limits, vary by county and are updated every year.
‘Jumbo’ Mortgages Are Still Widely Available
Borrowers who wish to obtain a mortgage loan in an amount that exceeds the 2017 conforming limits still have options. When a home loan exceeds the caps set by the Federal Housing Finance Agency, it is referred to as a “jumbo” mortgage product, and it cannot be sold to Fannie Mae or Freddie Mac.
Jumbo loans are still widely available in the U.S., but the qualification criteria are generally stricter for these products due to the higher level of risk involved.
Jumbo mortgage products do not meet the underwriting guidelines set forth by FHFA, so they are not eligible for purchase by Fannie Mae and Freddie Mac. As a result, eligibility requirements are often more stringent with these larger “non-conforming” loans. Lenders often require higher credit scores and larger down payments for jumbo loans, though the specific criteria vary from one lender to the next.
To find the 2017 conforming loan limits for your county,contact an Ameican Bancshares Mortgage Loan Originator.
This article is from loanlimits.org
Category: American mortgage