Loan limits for mortgage loans backed by Fannie Mae and Freddie Mac will increase next year for the first time in ten years. In recognition of rising home prices nationwide, the loan limit for a conforming loan (not a jumbo loan) will increase from $417,000 to $424,100. For areas like the Seattle/Bellevue metropolitan area, which have a more expensive housing market, loan limits are much higher. In King, Pierce and Snohomish counties conforming loan limits will increase from $540,500 to $592,250 next year.
What does this mean if you’re planning to purchase a home in 2017? Jumbo mortgage loans (over the new limit of $592,250) generally have higher interest rates, require higher credit scores and larger down payments of 15-20%. These steep requirements can keep many highly qualified home buyers out of the market – buyers who have the income and employment history to qualify for a loan but don’t have a 20% down payment. When the conforming loan limit is raised, it opens the door giving qualified buyers with 3%, 5% or 10% down an opportunity to get in the game.
If you haven’t talked with a lender or Realtor® lately, now would be the time to start that conversation to see how the increase in loan limits could benefit you.