The FHFA has increased the qualifying loan limit, making larger mortgages available to homebuyers. (iStock)
The Federal Housing Finance Agency (FHFA) has announced new compliant loan limits for 2023. This means homebuyers will be able to get bigger home loans backed by Fannie Mae and Freddie Mac.
After the FHFA’s third-quarter Home Price Index showed home prices rising an average of 12.21% year-over-year, the FHFA increased baseline-matched loan limits for single-family homes by the same amount. The new mortgage limit for Fannie and Freddie-backed traditional loans will increase from $647,200 in 2022 to $726,200 in 2023.
But mortgage amounts increase in higher-cost areas. Where 115% of local median home prices exceed $726,200, homebuyers pay 150% of their normal loan limit. Allowed to use loan limits in high cost areas. This pushed the new limit for high-cost areas above $1 million to $1,089,300.
Special provisions in Alaska, Hawaii, Guam, and the U.S. Virgin Islands provide credit limits comparable to high-cost areas above $1 million.
If you’re looking to buy a home, some lenders will start offering mortgages with new loan limits in December. Visit Credible to find personalized interest rates and compare options.
What is a Fannie Mae and Freddie Mac Guaranteed Mortgage?
Homebuyers were previously able to obtain mortgages in excess of $1 million, but these mortgages were not guaranteed by Fannie Mae or Freddie Mac. That is, they had no government guarantee and were considered “ineligible loans.”
There are several benefits to using a conforming loan, or a loan sponsored by Fanny and Freddie. For most borrowers, these loans offer greater consumer protection and lower interest rates. For example, during the COVID-19 pandemic, homeowners with loans sponsored by Fanny and Freddie could forego their mortgages and suspend their monthly mortgage payments in the event of hardship. I was.
There are also options available, such as a 3% down payment for first-time homebuyers. Although a qualifying loan is the preferred option for most borrowers, some circumstances may lead you to a non-matching loan, such as a higher loan amount or not having the required credit score to obtain a qualifying loan. there is.
If you’re interested in getting a mortgage, you can use online marketplaces to compare your options. Visit Credible to compare multiple lenders at once and choose the best option.
Home prices continue to rise
Home price growth has slowed in recent months, but remains high by historical standards.
Home prices fell 0.5% from August to September, according to the latest data from CoreLogic. However, September house prices rose 11.4% compared to last year. While this is a historically high number, it is the fifth straight month of declining annual growth. As house prices continue to rise, more borrowers are looking for bigger mortgage options to buy a home. However, this growth rate is expected to slow to just 3.9% annually by September 2023.
Thelma Hepp, interim head of CoreLogic’s chief economist’s office, said in a house price report: “In the West Coast and Mountain West states, house prices have slowed from their highs this spring, but have remained high since a year ago.
“By contrast, in markets where the influx of high-income households continues, home price growth is still significantly higher than national levels,” Hepp said.
If you’re interested in buying a home in today’s market, you can keep costs down by comparing multiple lenders. Contact Credible to speak with a mortgage expert and have your questions answered.
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