Fannie Mae announced new loan limits this week for mortgages. This is welcome news for homebuyers looking to buy in 2018. The new conforming loan limits for most of the US will be $453,100.
Why does this matter? How does it help homebuyers? For those looking to buy, this will save money over a “jumbo” mortgage. Typically interest rates are higher for jumbo loans. Mortgage requirements can be more complex for jumbo mortgages. Many investors require 20% down for mortgages over $453,100. So if you are buying a home for $500,000, you will only need 10% down to reach the conforming loan limits.
Fannie Mae and Freddie Mac are government-sponsored enterprises that buy loans that conform to their guidelines from lenders. Then, they sell them to investors. Loans that meet Fannie and Freddie guidelines often cost lenders less to originate and are less risky for investors.
Property values increased by 6.8% between the third quarter of 2016 and 2017, which will lead to an increase in the baseline maximum conforming loan limit by the same percentage. Last year there was a small increase in the limit but prior to that it had been about 10 years since the last increase.
This new limit is for loans in 2018. This could be a huge help for those looking to buy in 2018!