It's #FirmFactFriday at The Mortgage Firm Trinity! And we want to talk about recent loan limit increases, and what this may mean for your home loan options.
Halloween may be right around the corner, but current rising home prices are spooking today's market.
In this short video, Barry and DeLynn tell you why rising home prices may not be all that scary considering a recent loan limit increase.
It's not all scary! There is good news for some!
With the rise of home prices comes new limits on Jumbo loans (Non-Conforming Home Loans).
Earlier in 2021, loan limits set by the FHFA (Federal Housing Finance Agency) were $548,250. The new loan limit is now $625,000.
RELATED: See this recent article from HousingWire.com predicting home prices will rise 16% in ‘22!
What this means for home buyers
The increase in loan limits means some guidelines are now easier for both non-conforming and conforming home loans!
Knowing the difference between these two types of loans can help you get the house you want, or even help you save money.
What is a Jumbo loan (Non-Conforming Home Loan)?
When securing a loan for a more expensive home, a conventional mortgage may not be enough. For 2021, if your loan amount exceeds the $625,000 conforming loan limit set by the Federal Housing Finance Agency (FHFA) in most counties, then you’ll need to get a non-conforming, or jumbo loan.
In certain high-cost areas, this limit may be set higher (currently up to $822,375) to account for higher home values.
The Difference Between Conforming and Non-Conforming Loans
A conforming loan is a type of conventional loan that meets Fannie Mae and Freddie Mac, two of the largest mortgage buyers in the U.S., standards for purchase, and does not exceed the loan limit set by the FHFA, which is currently $625,000.
Conforming Loans:
It may be sold to Fannie Mae or Freddie Mac
More likely to be cheaper
Are more common
Limited to $625,000 in most areas, and up to $822,375 in higher-cost areas
General require a minimum of 620 credit score
Have a maximum debt-to-income ratio of 43%
A non-conforming loan is a loan that does not meet Fannie Mae and Freddie Mac’s standards for purchase, and exceeds FHFA’s loan limits. There are two reasons a loan may not conform -
The loan is too large to be considered conforming - currently above $625,000
Someone else can buy the loan
Non-Conforming Loans:
It may be held by the lender, or sold to another lender
More likely to be expensive
Are less common
Have potentially no limits on loan size
Have a Minimum credit score requirement of 580
The maximum debt-to-income ratio varies by lender
Which type of loan is right for you?
If you are hoping to purchase a fairly-priced home and don’t require a government-backed mortgage program, such as VA loans, FHA loans, or USDA loans, it is generally best to pursue a conforming loan.
This will save you money overall, particularly as it relates to the down payment and interest rate.
If you are hoping to purchase a more expensive home, or you could benefit from a government-backed mortgage, a non-conforming loan may be the best option for you.
How we can help you get financing
Our team at The Mortgage Firm Trinity is ready and able to help answer your questions, get you pre-qualified for and apply for the best loan option for you.
We are dedicated to helping close your loan. Contact our team to discover your financing options.
Sincerely,
Barry Horvath
Branch Manager
The Mortgage Firm Trinity
727-934-9348