No Changes in 2013 for Basic Conforming Loan Limits
The Federal Housing Finance Agency (FHFA) announced new conforming loan limits for 2013. More of the same, as the basic maximum limits did not change. (There might be changes for some counties qualifying for different amounts in the high cost areas).
The housing market is showing signs of thawing out after a long period of declining prices. With a decline of foreclosures, increased housing starts and a hopefully improving economy, many households are looking to purchase a home and take a mortgage, or refinance an existing loan.
Government guaranteed or bought loans are the major product on the market, including Fannie Mae and Freddie Mac loans. Loans that meet (or conform to) the underwriting criteria of Fannie Mae and Freddie Mac are called conforming loans. Every year, the Federal Housing Finance Agency (FHFA) issues new conforming loan amounts. If a loan exceeds those amounts and does not qualify for a Freddie Mac or Fannie Mae backing, then it is generally referred to as a jumbo loan.
Conforming Loan Limits – An Overview
The conforming loan limits are set by geographical location (county) and the number of units the borrower is purchasing and financing (from 1 unit to a 4 unit complex). The conforming loan limits for a one-unit property can be summarized as follows:
- Basic Loan Limit for most places is $417,000.
- High Cost Area (or Super Conforming Loan Limit) for most places is: $625,500
- Alaska, Guam, Hawaii and the US Virgin Islands have higher limits.
Here is a table for the basic amounts for a single-family, one-unit home:
|Geographical Area||Maximum Base Limit|
|Contiguous States, D.C. and Puerto Rico||$417,000|
|Alaska, Guam, Hawaii, and US Virgin Islands||$625,500|
|Note: There are higher values for 2-unit to 4-unit transactions.|
Conforming Loan Limits and Your Options
Since the demise of the subprime mortgage market in 2008, conforming loans are the major type of loans available. However, there are other options, including these three popular ones:
- Jumbo loans: Jumbo loans are loans that exceed the conforming (or high area conforming) loan limits. They are available for borrowers with good credit and a loan to value ratio (LTV) up to 70%. Since these loans are available through private lenders, the amounts and conditions vary. Shop around and get a mortgage quote.
- FHA Loans: If you are a borrower with very fair credit and/or have a very low downpayment, then a FHA loan is a good possibility. FHA loan limits are in general a bit higher than the conforming loan limits. Shop around and get a mortgage quote.
- VA loans: If you are an eligible VA, then a VA loan is a good alternative. Although the VA does not have a maximum loan limit, they do place a limit on the amount they guarantee, which essentially limits the amount a lender will offer you. The VA guarantees (for loans over $144,000) 25% of the loan limits. There limits vary by county and ranged (as of late 2012 from a standard $417,000 to $615,000 with the maximum in certain counties at $1,094,000. Shop around and get a mortgage quote.
Prepare and Shop for a Conforming Loan
By preparing your budget, saving money for a large down-payment, lowering your monthly debt payments, and increasing your credit score you will increase your chances to qualify for a mortgage loan at the best rates. Most borrowers should be able to fit into the 2013 conforming loan limits.
When you are ready to buy a home and take a mortgage loan or refinance your current loan, check out your options, then shop around.