Conventional Loan Limits Rising



Well, maybe… after a decade of being stuck at $417,000 (although it is higher in the “high cost” areas determined by the government), there may be a rise in the conforming limit. We’ve been down this road before, but it could happen this time. Why?

During the height of the housing boom, many talks focused on raising the limit over $417,000. We all know what happened next… housing crash, home values plummet, and $417,000 was more in line with the market.

Fast forward a few years, and home values are rising again! Some indices show the values are back to pre-recession levels. With home values rising, the Federal Housing Finance Agency (FHFA) is considering the increase in conforming loan limits. This could help spur home purchases. Why?

  • Conventional loans come with smaller down payment requirements than Jumbo loans.
  • Conventional loans typically have better interest rates than Jumbo loans.
  • This makes it easier to qualify for a Conventional loan than a Jumbo loan.
  • Home buyers moving up to a pricier home are more comfortable using a Conventional loan.

The FHFA will decide this fall on whether or not to raise the conforming loan limits. If so, look for increase to begin for new loans starting January 1, 2016.


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One Response to “Conventional Loan Limits Rising”

  1. Mortgage Loan Limits Rise | The Mortgage Blog Says:

    […] some discussion on raising limits last year (that didn’t happen), mortgage loan limits are increasing for the first time in over a […]

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