Homebuyers can get excited for new loan limits in high-cost areas.
On November 27, 2018, FHFA, or the Federal Housing Finance Agency (https://www.fhfa.gov/) made an announcement that for the year 2019, there will be a new maximum conforming loan limit amount for all home mortgages that will be acquired by the companies Fannie Mae (www.fanniemae.com) and Freddie Mac (www.freddiemac.com) . The loan limits will increase from $453,100 to new amount of $484,350.
This change will be valid in what is being termed by the Federal Housing Finance Ageny as “high-cost areas”. This means areas that are 115% of the local median home value and exceeds the baseline loan limits for those areas. In these high-cost areas, the loan limits will increase from $679,650 to new amount of $726,525.
Historically, the loan limits must be conforming for Fannie Mae and Freddie Mac and are determined by the Housing and Economic Recovery Act (HERA) of 2008, which establishes baseline loan limits. According to the Federal Housing Finance Agency, seasonally adjusted Home Price Index (HPI), house prices increased 6.9 percent, on average, between the third quarters of 2017 and 2018. Therefore, the baseline maximum conforming loan limit in 2019 will increase by the same percentage.
The new loan limits are restricted to one-unit properties. In regards to two-to-four-unit properties, those limits have also been increased.
All homeowners and homebuyers should be excited about this new change for 2019 and these changees should be a indicator of the economic strength of the current housing market. These increases will take effect on or after January 1, 2019 or feel free to follow up with any questions or to start your home search.
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