A recent Federal Housing Finance Agency (FHFA) announcement will give home shoppers even more buying power in 2020.
Why? Because conforming loan limits are increasing for the fourth year in a row.
Conforming loans—those that are backed by Fannie Mae and Freddie Mac—are some of the most popular options for homebuyers today as they typically come with lower interest rates, more flexible down payment options, and are easier to qualify for than non-conforming or jumbo loans.*
As home prices increase, it only makes sense that loan limits follow suit to allow borrowers enough to cover the cost of a home. The new loan limits set by the FHFA make it easier for borrowers to qualify for the financing they need.
So, what are the changes?
In 2019, the FHFA rose conforming loan limits by 6.8 percent to $484,350, with higher loan limits in known high-cost areas. This year, loan limits jump roughly 5.4 percent to $510,400 nationwide, with additional increases in high-cost areas.
For Washington, this means King, Pierce and Snohomish counties all have a higher loan limit of $741,750.
Find a map of maximum 2020 loan limits across the U.S. here.
When do the changes take effect?
Loan limits apply to any loan that closes on or after January 1, 2020.
What about Jumbo Loans?
Jumbo loans are a great option for buyers looking to purchase a luxury home in a high-cost area. However, this loan type is not always ideal for the everyday buyer. An increase in conforming loan limits allows buyers to benefit from some of the advantages over a jumbo loan including:
- lower down payment options
- lower credit requirements
- lower interest rates
The first step to understanding how an increase in loan limits can benefit your homebuying journey in 2020 is to reach out to your local Mortgage Consultant.