As expected, the conforming loan limit for 2019 has increased thanks to an ongoing rise in property values, according to a news bulletin released by the Federal Housing Finance Agency (FHFA) this morning.
Beginning in 2019, the maximum loan amount for a one-unit property will be $484,350, a $31,250 increase from the current $453,100 limit.
Per the FHFA’s seasonally adjusted, expanded-data home price index (HPI), property values increased 6.9% between the third quarters of 2017 and 2018.
As a result, the conforming loan limit in 2019 will rise by the same percentage.
For reference, home prices rose by 6.8% in the same period a year earlier. So despite some negative press regarding the housing market recently, it’s still humming along just fine.
Higher 2019 Conforming Limit May Help Homeowners Secure Lower Mortgage Rates
- Home prices increased 6.9% between Q3 2017 and 2018
- As a result the conforming limit will rise by same percentage
- This could benefit new and existing homeowners
- Since conforming loans are generally priced lower and easier to qualify for
This so-called “baseline conforming limit” is the maximum loan amount acceptable for residential mortgages eligible for purchase by Fannie Mae and Freddie Mac.
It also applies to VA home loans, which are offered to active duty military and veterans.
Generally, conforming mortgages price cheaper than non-conforming ones, such as jumbo loans. However, this isn’t always the case.
Still, if you can keep your loan amount at or below the conforming limit, you should have the widest array of loan options available to you and the best pricing.
To give you an example, someone purchasing a $605,000 home this year and putting down 20% would exceed the conforming loan limit, currently set at $453,100.
This might make financing more complicated or difficult to find, not to mention the higher mortgage rate that could apply.
Come 2019, they’d be able to buy the $605,000 home with 20% down and stay just below the conforming limit, thereby improving their chances of securing a low mortgage rate with just about any lender out there.
They may also enjoy a lower mortgage rate thanks to a favorable forecast for 2019.
2019 High-Cost Loan Limit Will Rise to an Even Higher $726,525
- In the most expensive regions of the country
- Along with Alaska, Hawaii, Guam, and the U.S. Virgin Islands
- The max loan limit will increase to $726,525
- Which is 150% of the standard conforming limit
Of course, there are high-cost loan limits as well, which will also increase in 2019.
The new “ceiling” for one-unit properties in the most expensive areas of the country will be $726,525, or 150% of $484,350.
Borrowers in places like Los Angeles, San Francisco, Washington D.C., NYC, and other high-priced cities will be able to take out even larger mortgages backed by Fannie and Freddie.
Additionally, home buyers in Alaska, Hawaii, Guam, and the U.S. Virgin Islands will enjoy the same increased loan limit.
For example, a $900,000 home purchase with 20% down will fall under this new ceiling, which should cover most of the home buying population in the United States.
However, mortgage rate pricing is often slightly higher for these hybrid conforming-jumbo loans.
Overall, the maximum conforming loan limit will be higher in all but 47 counties (or county equivalents) in the nation come next year, which could make life a little easier for home buyers facing higher interest rates and asking prices.
Read more: Jumbo loans vs. conforming loans.