2018 Conforming Loan Limits Increase Helps More Buyers Qualify

It has just been announced that conforming loan limits 2018 will increase significantly.  The good news is this will help more buyers with affordable financing.  Affordable financing means great rates and lower down payments, but up to higher loan amounts.  Basically, the surging home prices across the country have allowed the Federal Housing Finance Agency (FHFA) to increase loan limits twice in 2 years.  Prior to the 2017 loan limit increase, it had been over 10 years since the last increase.  Most experts believe home prices are expected to climb even more.  So, buyers may consider buying sooner rather than later.  Conversely, sellers may want to do the opposite.  Yet, if a seller waits to sell, then the seller would have to pay more on the new home.  Either way, rates are still historically low and it is still a great time to buy!

FHFA states “As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the maximum conforming loan limit will be higher in 2018 in all but 71 counties or county equivalents in the U.S.”  

What are Conforming Loans?Russell Smith conforming loan limits 2018

Conforming loans, also known as conventional loans, “conform” to Fannie Mae or Freddie Mac guidelines.  A conforming loan offers as low as 3% down payment for primary residence purchases all the way to substantial down payments.  These loans are typically used to purchase or refinance a primary, secondary, or rental property.  With the conforming loan limits 2018 increasing, it will allow more buyers in the top loan amount range to have access to affordable financing.  Jumbo loans are loan amounts which exceed the conforming loan size limits.  The primary advantage of conforming loans compared to jumbo loans is conforming offers a lower down payment.

Although this article discusses larger size loans, conforming loans are great loans for lower loan sizes as well.  As mentioned, there are low down payment loans which even allow the entire down payment to be a gift.  Also, Fannie and Freddie Mac loans offer benefits such as leniency on student loans in Income Based Repayment.  This flexibility helps buyers qualify easier with lower debt to income ratios.  Furthermore, borrowers with higher credit scores but lower down payment may save in mortgage insurance payments compared to FHA.  Plus conforming mortgage insurance may stop down the road, where FHA mortgage insurance continues for life unless 10% or more down payment.  Check out when PMI stops for all loan types in this popular article.  There are still plenty of other times where FHA is the better option.

Conforming Loan Limits 2018 for 1 - 4 unit housing in contiguous U.S.
Number of unitsConforming Loan Limits 2018High Balance Conforming Limits 2018
1453,100679,650
2580,150870,225
3701,2501,051,875
4871,4501,307,175

Conforming Loan Limits 2018conforming loan limits 2018

Now, keep in mind that the limits shown in the chart above are the standard loan limits.  As shown in the chart, there are high balance levels as well but these could vary based on the county.  This increase should help in most areas but it especially helps larger Metropolitan areas.  These include Charlotte, Raleigh, Chapel Hill, Wilmington, Myrtle Beach, Charleston, Greensboro, Asheboro, and more.

VA home loans typically follow the conforming announcement with matching loan amounts.  So, expect VA to have the same limits.  Additionally, the FHA loan limits should be expected to increase with this news of home prices surging.  We will provide this information when available.

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Author: Russell Smith

Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.