2020 Vision: Loan Limits Increase Again
Last week, the Federal Housing Finance Agency (FHFA) announced an increase of the conforming loan limits for Fannie Mae and Freddie Mac financing programs in the new year. As of January 1, 2020, the national baseline limit will bump from the current $484,350 to $510,400. In certain high cost regions of the country the maximum amount will rise from $726,525 to $765,600.
This is good news for borrowers looking for more flexible financing on larger mortgages or in a higher market area.
Fannie Mae and Freddie Mac are nicknames for the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC), respectively. They are government-sponsored enterprises that guarantee and purchase loans from mortgage lenders to free up capital in the industry. The Federal Housing Administration (FHA) is expected to follow suit when they publish their loan limits early this month.
Not only is the new limit positive for borrowers, but it’s an indication of a strong and sustained housing market. The Housing and Economic Recovery Act of 2008 was established to determine the conforming loan limits based on home prices. The mandate was to limit loans if prices declined over a period of time. However, the limit was raised for the first time in a decade in 2016 from the $417,000 baseline up to $424,100. The 2020 bump brings the total increase since 2016 to $93,400.
The FHFA data showed an average rise in home prices over the last year of 5.38% which then determined the conforming loan maximum for the upcoming year. For pricier regions where home values increased as well, 115% of the median value surpasses the national baseline, which means buyers and refinancers will have the opportunity to borrow more if need be.
The maximum limit applies to specific areas such as Alaska, Hawaii, Guam and the U.S. Virgin Islands, as well as high market counties in California, New York and Colorado to name a few. There are loan limits that vary from $510,400 to $765,600 in several states and you can find the new map and amounts at FHFA.gov, or we at EnTrust Funding (ETF) can provide a quick answer for you.
While talk of an economic slowdown appears on the comfortably distant horizon, this announcement from the FHFA should continue to bolster the housing market and the opportunities for those hoping to buy or refinance in 2020. Our team at ETF has our eye on the future and can help you determine if these new limits increase your options as well.
Our mortgage services include FHA, VA, conventional and much more. Contact us today so we can get started on your “new year, new loan” financial resolutions.