The Federal Housing Finance Agency raised the maximum conforming loan limits for 2017, and the Federal Housing Administration, Veterans Affairs and US Department of Agriculture have followed suit for this year. This is the first time the limits have changed since 2006. In most areas, the loan limit has increased to $424,100, up from $417,000. In higher cost areas, including Washington, D.C., and Philadelphia, the limit increased to $636,150, up from $625,500.
Rising loan limits bring good news to both consumers and real estate agents. While interest rates will likely increase this year, higher maximum loan amounts present, for some would-be buyers, a golden opportunity to purchase the home of their dreams.
How This Benefits Your Clients
Requirements for securing a jumbo loan are more stringent than requirements for a conforming loan. For instance, the typical credit score needed for a jumbo loan is 720, as opposed to 620 for conforming loans. In addition, customers can have a higher debt-to-income ratio with a conforming loan. Typically, they can also put down a smaller down payment for a conforming loan than if they were applying for a jumbo loan. Raising the limit for conforming loans opens up more housing options for your clients who may not meet all the requirements for a jumbo loan.
Please, however, note that some local jurisdictions have their own loan limits, which may not match the FHFA. Your local Prosperity Home Mortgage consultant can provide you with loan limit details in your area.
How This Benefits the Industry
This move not only benefits consumers, but also real estate agents and lenders. Black Knight Financial Services calculates that this raise could result in 40,000 additional loan originations for an extra $20 billion. If you have clients who are searching for a home around these dollar amounts, this is a unique opportunity for them to expand their search and find the home they truly want.