Conforming Loan Limits to Remain Unchanged in 2011

November 22, 2010 No Comments »

flat rate

The Federal Housing Finance Agency (FHFA), which oversees mortgage financiers Fannie Mae and Freddie Mac, announced that the conforming loan limits will remain unchanged in fiscal year 2011.

The conforming loan limit for one-unit properties will stay put at $417,000, meaning anything above that will be considered a jumbo mortgage.

Corresponding loan limits for two, three, and four-unit properties will also remain at earlier levels: $533,850, $645,300, and $801,950 respectively, for homes in the contiguous United States.

“The national limit for 2011 was left unchanged based on prior declines in FHFA’s monthly and quarterly house price indexes over the past three years,” the FHFA stated in a release.

The Housing and Economic Recovery Act of 2008 (HERA) requires that the loan limit be adjusted each year to reflect changes in the national average home price, but does not permit declines in the limit.

Jumbo mortgages come with more underwriting restrictions because they can’t be purchased by Fannie and Freddie, and as a result, have higher associated mortgage rates.

In fact, mortgage rates on jumbo loans tend to be a percentage point or so higher than conforming mortgages, possibly enough to keep some would-be buyers out of higher-priced markets.

However, certain high cost areas of the United States will still enjoy so-called conforming-jumbo loan amounts up to $729,750, which tend to price closer to conforming mortgage rates.

They’re good for FHA loans and loans backed by Fannie and Freddie.

Leave A Response