Loan Limits for Residential Mortgages to Increase in 2019


Loan Limits for Residential Mortgages to Increase in 2019

The Federal Housing Finance Agency (FHFA) just announced that the conforming loan limits for residential mortgages will increase in 2019. The new base loan limit in most of the country, including Thurston and Kitsap counties, will be $484,350. This represents a 6.9% increase over the 2018 limit. The ceiling limit for “high-cost areas”, including King and Pierce counties, will be $726,525. These new limits give borrowers more purchasing power, as the cost of housing continues to increase in most markets. The conforming loan limits for Fannie Mae and Freddie Mac are determined by the Housing and Economic Recovery Act of 2008, which established the baseline loan limit, and mandated that after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels. This announcement marks the third straight yearly increase in the conforming loan limit. The FHFA’s third quarter 2018 House Price Index report showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018. Therefore, the maximum conforming loan limit in 2019 will increase by the same percentage to $484,350. Loan limits will also be increasing in “high-cost areas,” where 115% of the local median home value exceeds the baseline loan limit. The maximum loan limit in “high-cost areas” is calculated as a multiple of the area median home value, while setting a "ceiling" on that limit of 150% of the baseline loan limit. Loans with the higher limits must be submitted January 1, 2019 or later. All loans are subject to borrower eligibility and underwriting guidelines. Contact us at Penny Lane Financial to find out what options exist for your next mortgage.

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