“You can now buy a home for $510,000 with as little as 5% down.”
~ Anthony J. Marinaccio, SVP, Key Mortgage Services
HOUSINGWIRE recently reported that Fannie Mae and Freddie Mac conforming loan limits will increase in nearly every part of the United States.** This 6.9% increase is the first in a decade.
Marinaccio says this is good news for buyers. First, since many new buyers want to retain cash they can now buy a higher priced home with the same down payment percentage requirements. Second, buyers looking for conventional loans only need 5% down to get a 30-year fixed mortgage, but if they go JUMBO (i.e., a loan over this limit), 5% typically gets them a 5, 7, or 10-year Adjustable Rate Mortgage (thus, requiring 10% down for a 30-year fixed mortgage).
Marinaccio also points out that this increase similarly helps sellers by keeping price points in line with buyer demands. For example, in 2018 if a home is listed at $510,000 versus another listed at $475,000, buyers will opt for the lower priced home (even if this lower priced home has higher taxes). Thus, under the new loan limit increase, buyers have a viable option when looking at a higher priced home. For additional mortgage-related insights, check out Marinaccio’s blog.
** HOUSINGWIRE similarly reports that “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit, will also see loan limits increase to $726,525 (which is 150% of $484,350). Additionally, baseline loan limits will increase to $726,525 for one-unit properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands (per special statutory provisions).