Most buyers need to borrow money to buy their homes. While interest rates do impact buyer’s ability to purchase, so does the amount of money they need to borrow. Most lenders plan to sell the loans into the secondary money market, typically FNMA (Fannie Mae) or FHMLC (Freddie Mac). These government sponsored entities set loan limits, how large of a loan they will buy and what the required down payment amounts and loan criteria must be met for them to buy these loans.
This week these groups have announced new loan limits for our area for loans originated in 2018. With our rising home prices, these increases in loan limits will allow buyers needing financing to buy higher priced homes while still keeping their down payments in the 3, 5, 10 or 20% down range. The current loan limit for conforming loans is $424,100 and will be raising to $453,100 for 2018. They also offer loans, called “high balance” loans, typically requiring 5+ percent down payments and this limit is raising from the $592,250 to $667,000.
These increases will help buyers afford our increased home prices and keep their down payment requirements in a more manageable range. For those that need or want to buy more expensive homes and needing to borrow larger amounts, these loans are still available and are labeled “Jumbo” loans. Many local and national lending options are still available for these loans. The down payments vary with credit scores and other factors and can offer competitive interest rates as well but are not sold off in the normal secondary markets, so loan terms vary with the lenders offering them.
If you need assistance on finding the right loan program for you, feel free to give me a call and we can find a solution that fits your needs best.