Conforming Loan Limits Increase for the First Time in a Decade
Loan limits for conventional conforming mortgages will increase on January 1, 2017. Different loan programs have different loan limits that are mandated by the federal government. These limits or maximum loan amounts vary by county. They are based on a number of parameters including median home price. Double digit appreciation over the past few years in our region as well as others across the nation prompted the Federal Housing Finance Agency (FHFA) to increase the maximum allowable loan amount for conventional conforming loans for the first time since 2006.
The FHFA only recently gained the ability to raise limits based on a trigger provided for in the Housing and Economic Recovery Act of 2008 (HERA), which states that loan limits can only be increased when the average U.S. home price surpasses prices observed in the pre-decline period of Q3 2007. The average home price in the U.S. for Q3 2016 just barely exceeded average pre-decline home prices by 1.7%. See the table below for new loan limits effective 01/01/20017. Boulder County is unique in that our limits are higher than most of the country. Click here to view the map.
|County||2016 Limit||2017 Limit|
The loan limit increase is welcomed because home buyers are currently getting the best interest rates through conventional loans that are conforming with Fannie and Freddie guidelines and will now be able to get a larger loan without having to jump over to jumbo loans. Jumbo loans are characterized as conventional loans that exceed the conforming loan limit and often times require more down payment and higher interest rate.