The Federal Housing Finance Agency (FHFA) has just increased the amount of money that can be borrowed through a conventional home loan to $647,200. In some areas, the limit is even higher. The new limits will take effect in 2022.
This is great news for buyers and owners alike.
- Buyers may be able to borrow more money through a conventional, typically lower-rate loan.
- Owners may be able to refinance their “jumbo” loan to a lower rate conforming loan and possibly drop mortgage insurance, too.
- Combining (or avoiding) smaller 1st and 2nd mortgages may now be an option.
- The increase reaffirms the health of the housing market and your decision to invest in a home.
Here are the specifics about the change:
- The standard loan limit, also known as the conforming loan limit, rose by 18% to a maximum of $647,200 in most areas.
- High-cost areas and properties with 2-4 units also have increased loan limits.
- The percentage increase is equal to the national appreciation average over the last year.
- This is the 6th year in a row that the FHFA has raised the limit, after a decade of no increases. The limit has risen more than $230k over six years.
If you have questions about what this change could mean for you, please reach out to your Homeowners Licensed Mortgage Professional.