We will update this blog on loan limits on government and conventional loans with updated content from previous years. In this blog, we will continue to cover the loan limits on government and conventional loans and update you on the 2023 loan limits on government and conventional loans. For the past 12 months, the economy has been volatile. Mortgage rates went from a low of 2.5% to over 7.0% on a 30-year fixed-rate mortgage. Inflation soared to 20-year highs. The Dow Jones Industrial Average does not know which direction to go. Housing prices have gone up 40% in the past 36 months. The mortgage industry is in shambles. Thousands of mortgage professionals are getting let go. Mortgage companies are closing up shop. Experts forecast that half the licensed loan officers will leave the business in the next six to twelve months.
2024 FHA Loan Limits
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2024 Conforming Loan Limits
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Will 2023 Be a Good Year To Buy a House?
The refinance market is completely dead. Many newer licensed loan officers have not heard of or done a single FHA, or VA streamline refinance loan. The only refinance that is showing signs of life is cash-out refinance mortgage loans. In the following paragraphs, we will continue with the older blog on 2022 loan limits on government and conventional loans. The top half of this blog will be the updated 2023 loan limits on government and conventional loans.2023 Loan Limits on Government and Conventional Loans Increase Again
The housing market is booming. Home prices have increased substantially yearly for the past ten years. There is no sign of any housing market correction. HUD and the FHFA have increased FHA and Conforming Loan Limits for the past five years due to rising home prices. Every calendar year, lending agencies such as FANNIE MAE, FREDDIE MAC, USDA, FHA, and VA change their maximum loan amount guidelines. Loan limit information is gathered over a 12-month period and adjusted annually. This article will detail when these changes will go into effect for each agency. We will also detail how you can apply for a loan with Gustan Cho Associates. Gustan Cho Associates is always trying to educate our readers on mortgage-related changes. This year we have quite a large change in the conforming and FHA loan limits. In this blog, we will detail the new loan limits, the reason for the change, and how to apply for a mortgage with Gustan Cho Associates to utilize these new loan limits.Changes in Loan Limits on Government and Conventional Loans
Conforming loan limits and FHA loan limits change every calendar year on January 1 based on the average home price for the previous four fiscal quarters. The Federal Housing Finance Agency, or FHFA, gathers this information. Each year, FHFA is required to publish the average home price index, which gives information on the average home values across the nation. In 2022, house prices increased by 12.21%. This data was gathered from quarter three of 2021 through quarter three of 2022. Since this increase was above 12%, the FHFA increased the conforming loan limit by the same amount. This was a very substantial change! In most counties across the United States, the 2023 conforming loan limit for a single-unit property will be $726,200. This is an increase of $79,000 from the previous year when the conforming loan limit was set at $647,200. This was once again a very large increase compared to years past. We don’t think the conforming loan limit increase will be as substantial for 2024 because home appreciation is starting to level out and even decline in some areas across the nation. We will address this next year when FHFA publishes 2023 data.What Are High-Balance Mortgage Loans?
High balance areas. High-balance or high-cost areas are counties where the local median home value exceeds the conforming loan limit by at least 115%. In these counties, the conforming loan limit for a single-family property can be as high as $1,089,300. This incredibly high loan limit of over $1 million is in counties surrounding the Los Angeles, San Francisco, and Washington, DC, areas. It is wild to think you can now purchase a home with a conforming loan and have a loan amount above $1 million. Anything above this loan limit in your county will require a jumbo loan, which has a completely different set of qualifications. For more information on jumbo mortgages, please get in touch with Gustan Cho Associates today. We are experts in Jumbo financing.Loan Limits on FHA Loans Increase For 2023
FHA loan limits for 2023 have also increased substantially. For all effective FHA case numbers assigned after January 1, 2023, the loan limit for most counties across the nation will be $472,030. This is considered the loan limit floor on a single-unit property. In high-cost areas discussed above, an FHA loan limit will be the same as the conforming loan limit for a single-unit property, and it said at $1,089,300. This is considered the loan limit ceiling. The FHA loan limit is typically set at 65% of the conforming loan limit for easy calculation. The FHA loan limit in the year 2022 was set to $420,680 for most counties. So, there is quite a large increase yearly, over $50,000. Once again, we feel FHA will keep its loan limit unchanged for 2024.Loan Limits on VA Loans For 2023
VA loan limits. As most of our veteran readers know by now, there is no loan limit for VA financing. With the required entitlement, a veteran can buy a multimillion-dollar house without a down payment. That’s right. You read that correctly. Due to the Bluewater Navy Vietnam Veterans Act, the VA eliminated its loan limit requirements. For more information on utilizing your entitlement to see exactly how much loan you can qualify for without a down payment, please reach out to the VA experts on the Gustan Cho Associates today.2022 Loan Limits on Government and Conventional Loans Increases
If you have been following our blogs, you have likely already seen the loan amount increases on conventional mortgage lending and FHA. For 2022, the maximum conforming loan limit in the US is now at $647,200. The maximum loan amount for FHA will be $420,680. This is in your standard counties across the country and not high-price areas. For 2022, the high-cost FHA and conforming loan limit are capped at $947,800.Loan Limit Increased For The Past Six Years Due To Skyrocketing Home Prices
These increases were implemented based on the previous 12 months of available data. The measurement used to create loan limits is based on the home price index or HPI. Over the past 12 months, we saw a 14.42% increase nationwide. This is a good sign for the housing market. This increase means real estate values are up nationwide. In some areas of the country, the increases have been higher than normal. Even during the COVID-19 coronavirus outbreak, it’s a good sign to see increases throughout the housing market. While some areas of the country have decreased, the home price index is based on a nationwide average. For more information on these increases, please see our blog on FHFA 2022 LOAN LIMITS.When Does The New 2022 Loan Limits Take Effect
When can a client utilize the increased loan limits? This is a good question, and it varies per agency. Each agency has its own timeline for when these increases will go into effect. Conventional mortgages already allow increased loan amounts as long as the lock rate is valid through January 4, 2022. This is true for Fannie Mae loans submitted through the desktop underwriter (DU) before December 12, 2021. Those findings receive an approve/ ineligible recommendation when only ineligible due to exceeding the 2021 loan limits.New FHA and Conventional Loan Limit Takes Effect Before January 2022
As long as the loan amount is within DU compliance with the applicable 2022 loan limits, the AUS can be submitted or resubmitted on or after December 12, 2021. The same is true for Freddie Mac. A loan submitted through a loan prospector (LP) before December 13, 2021, receiving an accept/ ineligible recommendation only due to a loan exceeding the 2022 mortgage limits is acceptable. This only holds true if the submitted loan amount complies with the applicable 2022 loan limits. 2022 loan limits will be applied to all case files submitted on her after December 13 for Freddie Mac. You may already utilize the 2022 loan limits on all conventional mortgage loans. Anything over the 2022 low ma’am will still fall into the JUMBO mortgage category, which has completely different qualifications.Loan Limits on Conventional Versus FHA Loans
Since the Federal Housing Finance Agency announced the mortgage limits for 2021, we have received numerous phone calls from clients asking when they will be able to utilize the higher loan amount thresholds. For FHA loans, you cannot close until 2022. FHA loan limits are based on the FHA case assignment date. The new mortgage limit only applies to case numbers submitted on or after January 1, 2022. FHA case numbers must be honored after that date, or the 2022 mortgage limit will be applied. If your automated underwriting system findings were submitted before this date, the loan is NOT eligible for funding with the higher loan amounts. This is incredibly important if you need higher mortgage limits. A new file and case number must be started and assigned after New Year’s Day, 2022. If this is unclear, please call Mike Gracz at (800) 900-8569. Mike can provide clarification and the mortgage limit for your specific County. You may also email gcho@gustancho.com.VA Guidelines on Loan Limits on VA Loans
Most veterans are aware that VA mortgage lending no longer has mortgage limits. Blue Water Navy Vietnam Veterans Act of 2019 removed loan limits at the beginning of 2020. President Donald Trump signed this act into law in July 2019. However, VA entitlement is still important for VA mortgage lending. New loan limits for each county will go into effect after January 1, 2021. Entitlement is calculated based on the county limits, which will go into effect on this date. Although the VA has not officially announced the maximum guarantee amount for these transactions, any loan needing to use the new loan limits must close on or after January 1, 2021. For more information on entitlement and VA mortgage lending, please call Mike Gracz at (800) 900-8569.2022 Loan Limits on USDA Mortgages
USDA lending is slightly different. As of today, USDA lending does not have a maximum mortgage limit. Instead, USDA loans limit income and the home’s value. No specific automated underwriting or loan delivery requirements apply for loan limit purposes for USDA mortgages. USDA mortgages can be a bit tricky. Suppose the home is in a USDA-eligible area. In that case, you will want to utilize USDA ELIGIBILITY MAP to ensure your income and the home’s value are within the allowable thresholds.2022 Mortgage Limits on FHA Loans Take Effect January 1st, 2022
If you already have a mortgage loan in process that could be outside of the 2021 loan limit but inside of the 2022 limit, you will need to start the transaction over. A new loan file must be disclosed to you. As mentioned above, you must apply after the new year to utilize the higher limits if this is an FHA mortgage loan. The case number cannot be assigned down the road.Cash-Out Refinance Loan Limits on Government and Conventional Loans
Cash-out refinances – The conventional route will allow you to utilize the higher loan limit thresholds if you are in the market for a cash-out refinance. Please remember, to utilize the higher FHA mortgage limits; you must wait to apply till January 1, 2022. This low mortgage rate environment is a great opportunity to pay off consumer debt, take out money for investments, or even buy an investment property. The housing market should stay strong as the country goes through the COVID-19 turmoil. This could be a great opportunity to buy a foreclosed or multi-unit investment property. For more information on cash-out refinances, please give us a call today.FHFA Increases Conventional Limits
FHFA Increases Conventional Loan Limits For 2022 from $548,250 to $647,200, effective January 2022. This is great news for homebuyers seeking Conventional loans on higher-priced homes. Fannie Mae and Freddie Mac are the two mortgage giants that set conventional mortgage guidelines. FHFA Increases Conventional Limits is due to rising home prices nationwide. There is no word from HUD, VA, or USDA on when they will follow the lead of FHFA on FHFA Increases Conventional Limits. Normally when one agency raises loan limits, the others follow back to back. In this article, we will discuss and cover FHFA Increases in Conventional Limits For 2022.
Conventional Mortgage Loans
For all conventional mortgage loans dated after January 1, 2022, the maximum conventional mortgage loan limits will be increasing to $647,200. This announcement was sudden notice, and not all mortgage lenders will honor the new conventional loan limit increase. Gustan Cho Associates will honor the new FHFA Increase Conventional Loan Limits for January 2022. We do not have any overlays on government and conventional loans at Gustan Cho AssociatesMortgage Automated Underwriting System Findings
Regardless of lock status, if the underwriting department approves a loan and the borrower requests to take advantage of the increased loan amount parameters, the loan must be re-submitted to Underwriting with new Automated Underwriting System Findings for consideration.
All revised loan amounts are subject to the most recent guideline changes and eligibility criteria. FHFA publishes conventional conforming loan limits.