FHFA Home Loan Limits to Rise in 2023
With record-breaking inflation and sharp increases in home values across the US, the Federal Housing Finance Agency (FHFA) in 2023 will raise home loan limits for conforming mortgages by $79,000 from $647,200 to $726,200 in baseline areas of the U.S. In 2023, homes in designated higher-cost areas can be financed by conforming mortgages of up to $1,089,300. This amount is $118,500 more than the 2022 limit, $970,800.
What is a Conforming Mortgage?
Mortgages in the US are separated into conforming and non-conforming house loans. Conforming loans are those that are structured to meet certain requirements outlined by the FHFA. The Federal National Mortgage Association (commonly known as Fannie Mae), and the Federal Home Loan Mortgage Corporation (commonly known as Freddie Mac) are both government-backed corporations that also play a role in setting the criteria for conforming mortgages. Fannie Mae and Freddie Mac buy up home loans from banks in order to package them into securities and sell them to investors. This process drives down the cost of loans to the consumer since lenders have a way of exiting their positions faster than they would if there were not a market for securitized loans.
Conforming loans are not only more affordable in terms of the rates that are offered to borrowers, but they also have looser requirements, fewer fees, lower credit score requirements and, on the whole, lower down payments.
When do Lenders Offer Non-Conforming Loans
Non-conforming mortgages don’t meet the criteria set out by the FHFA, Fannie Mae and Freddie Mac. Many of them are for the portions of a house’s value that exceed the conforming limits for a one-unit home.
Called jumbo loans, this type of non-conforming loan has stricter eligibility standards, higher interest rates, more fees and almost always requires a higher down payment.
However not all non-conforming loans are for very expensive homes. Some government-backed programs sponsor loans such as the Veterans Affairs (VA) home loans that provide active duty service people, eligible veterans and surviving spouses mortgages at advantageous rates and with no limit. Another such program sponsors Federal Housing Administration (FHA) loans which have lower limits and guidelines similar to that of the FHFA.
Which Conforming Loan Limits Apply in My Area?
Conforming loan limits differ depending on which part of the US the house is based. The FHFA uses the local house price index (HPI) report, which shows median home prices in most areas of the country. If you live in certain counties in coastal California, New York, Alaska, or in one of the insular areas such as Hawaii, Guam or the USVI there is a good chance that your local area qualifies for the upper limits for conforming loans. In these higher-priced areas, higher conforming loan limits means that buyers are able to qualify for conforming loans that are more likely to cover the more expensive properties in their area without having to resort to a jumbo loan with its more stringent requirements and costs.
“Conforming loan limits differ depending on which part of the US the house is based.”
The Importance of a Knowledgeable and Experienced Mortgage Specialist
If you are looking for the best solutions at the most competitive rates, an independent mortgage broker can provide you with the following advantages over going directly to a bank:
Better Preparation. An experienced mortgage broker can help you find and gather all relevant documentation needed to make a loan application in the most efficient and streamlined way.
More Variety. Mortgage brokers can present the options and products of multiple lenders, helping you choose the solutions that best fit your needs. By contrast, working with a single lender’s representative means you only get that lender’s loan products,
Customized assistance. If you’re someone who doesn’t qualify for a traditional home loan, or you have less-than-perfect credit, a mortgage broker may be able to help you find lenders who will be amenable to your situation. Even if you’re a borrower who wouldn’t have any trouble getting a mortgage, a broker will meet with you (in person or virtually), go over loan options, highlight points of comparison and support you in making an informed decision.
While a mortgage broker isn’t a magic bullet, having a broker on your side will help you make an informed decision, and they’ll be there to help you every step of the way.
Intercontinental Ultimate Solutions
We provide the best rates, costs and products to meet our customers’ needs. Our mission is to provide exemplary personal service and industry expertise to all of our clients. Intercontinental Ultimate Solutions Inc. wishes to offer our customers mortgage options with fair rates and reasonable costs to be able to finance their home. We are licensed in Florida, Arizona, California, Colorado, Connecticut, California, Maryland, North Carolina, South Carolina, Texas, Virginia and New Jersey. This includes:
- Extensive knowledge of the mortgage brokerage industry, including expertise in all affiliated industries
- Total competence in the loan origination process, product knowledge and expertise
- Customer satisfaction is the main priority. We offer superior services and competitive products.
If you are considering the purchase of a property and require a loan, reach out to us today for assistance by calling (561) 717-6826 or via our contact form.
