Every year, different housing agencies review and update national loan limits for mortgages. This is important since home prices fluctuate over time. It seems necessary for loan limits to adapt to those changes.
Here’s an update on mortgage loan limits for 2017.
Conforming loan limits
Conforming loans are Freddie Mac and Fannie Mae loans. They are sold into the secondary mortgage market. National conforming loan limits are set by the Federal Housing Finance Agency (FHFA). Last year, the loan limit for single family homes was $417,000. For 2017, it’s increasing to $424,100.
FHA loan limits
FHA uses median home prices to determine loan limits. However, they also have a floor and ceiling to their limits, which is calculated using national conforming loan limits. For 2017, the FHA loan limit floor is $275,665 and ceiling is $636,150 for single family homes. This means that in markets with low median home sale values, the limit will be $275,665. In high priced markets, it will be $636,150. In most markets around the country, it will fall somewhere in between.
The following are FHA loan limits for several Colorado Counties:
$493,350 Clear Creek
Benefit to home buyers
How do loan limit changes impact home buyers? Some buyers qualify for a higher mortgage but are restricted by the loan limits. Going above the limit often means switching to a less desirable loan program. Therefore, higher limits allow these buyers to purchase a higher priced home or put less of a down payment.
In addition to the loan limit changes, programs such as FHA have other important changes such as reduced mortgage insurance premiums. Check next week’s column for more details.