A Hike in 2018 Loan Limits to Match Rising Home Prices

Great news - On Tuesday (for the second year in a row since 2006), the FHFA announced they are increasing the conforming loan limits for Fannie and Freddie in 2018.  The conforming loan limits will increase from $424,100 to $453,100 beginning in 2018.  - - Both Riverside & San Bernardino County fall into this category and the new conforming loan limit for 2018 will be $453,100.

Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit.

Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while setting a "ceiling" on that limit of 150% of the baseline loan limit.

According to the FHFA, median home values “generally increased” in high-cost areas in 2017, which drove up the maximum loan limits in many of those areas.

Therefore, the new ceiling loan limit for one-unit properties in most high-cost areas will be $679,650 (which is 150% of $453,100) for one-unit properties in the contiguous U.S.  In 2017, the high-cost loan limit was $636,150.  - - Both Orange County & Los Angeles County fall into this category and the new conforming loan limit for 2018 will be $679,650.  San Diego County loan limit will be $649,750.

What does this mean to Home Buyers? - On Conventional Home Loans - many home buyers will now be able to increase their loan amount when purchasing a home - with rising home prices, it's often been too difficult for home buyers to have a large enough down payment to purchase a home (lesser loan amount, higher down payment required).  Although a down payment will often still be required - the home buyer can now increase their loan limit to cover a portion of the funds needed to meet the home price they desire.  Some home buyers may now qualify for more traditional, conventional home loans instead of needing to take out 2nd loans to meet their purchase price down payment requirement.  

Did FHA Loan Limits Increase as well?  - This announcement is related to Conventional Loan Products, separate from FHA Loans - we're anxiously awaiting for an announcement on FHA Loan Limits for 2018.  Stay tuned...

Need additional information on home financing (down payment requirements, down payment assistance, closing costs, pre-approval process, loan products & options) - call or text me at 626-610-6302 or send an email to casey@smithandloans.com.  You can also click on the following link: Schedule a Free Loan Consultation to schedule a free home loan consultation with me.  

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Casey Smith, M.B.A., U.S. Veteran
Mortgage Loan Originator
CA BRE #01527014 NMLS #1588917
Pacific Seal Mortgage
w:pacsealmortgage.com  e: casey@smithandloans.com