For those of us who have been in or around the industry for many years, it probably feels like our conforming loan limit had been capped at $417,000 forever, thanks to the Great Recession.
We’ve been watching it crawl up over the last couple of years, but this year the conforming loan limit for non-high balance areas (i.e., areas just like ours) has increased to $510,400.
This means you can purchase a home for up $537,000 with as little as 5% down. In every other year I’ve worked in the industry, that would have always been a jumbo loan with a stricter reserve and credit score requirement, so this conforming loan limit change is differently creating new opportunities for families to get into higher-priced homes they qualify for.
FHA has also done a loan limit increase, just over $331,000. This means you can purchase a home for up to $343,000 with a 3.5% down payment. These changes are definitely needed, as we’re seeing purchase prices rising and inventory of homes in lower prices ranges diminishing.
Now, families will be able to purchase with affordable interest rates and affordable private mortgage insurance (PMI). Perhaps the most impactful change we’ve seen so far this year has been for our veterans; the VA has removed the cap on their 100% financing loan limit!
In years past, the VA always followed the conforming loan limits. If they continued doing that, their cap for 2020 would be $510,400, too, but they’ve wiped away the limit completely. So, a veteran who has full entitlement and qualifies for a million-dollar home, they buy it for 100% financing.
Remember: You can actually have multiple VA loans; it just depends on the amount of entitlement you have as a veteran. For bonus entitlement, VA loans will still be capped at the conforming loan limit, but the sky’s the limit for vets with full entitlement.
If you have additional questions about the information covered in today’s message, or what to know more about any of the services we offer, feel free to call or email me. I would love to speak with you.