Posted January 29, 2013Tweet
Current as of October 16, 2014 : The jumbo and conforming loan limits provided below reflect 2013 loan limits. If you get your local jumbo and conforming loan limit information somewhere else, make sure that source is accurate and up-to-date.
A "conforming mortgage" is so named because its loan traits -- quite literally -- "conform" to the loan rules set forth by Fannie Mae or Freddie Mac.
Fannie's and Freddie's mortgage guidelines are dense, covering thousands of home loan traits, but there is one over-reaching rule -- neither Fannie Mae nor Freddie Mac will securitize a mortgage that's considered "too big" for its books.
Defining "too big" is an annual decision-making process based on the economy and home price data. The debate results in a "loan size limit"; the maximum amount of mortgage that Fannie and Freddie will allow, per their respective home loan guidelines.
Loan sizes up to these maximum amounts can be conforming mortgages. Loan sizes beyond the conforming loan limit are often considered "jumbo".
2013 conforming loan limits are the same as from 2012, 2011, 2010, 2009, 2008, 2007 and 2006, with loan limits varying by property-type.
As he number of "units" increase for a property, its conforming loan limit rises. 1-unit homes have the smallest conforming loan limit, a classification which includes single-family residences of all types -- detached homes, row homes, town homes, condos and co-ops.
Multi-unit homes get access to larger loan sizes.
Note that these limits are for conforming mortgages only. FHA loan limits -- including for the FHA Streamline Refinance -- use different scale. The FHA, for example, allows up to $729,750 for a 1-unit property.
The 2013 conforming mortgage loan limit, as established by Fannie Mae and Freddie Mac, does come with exceptions. Specifically, for areas designated as "high-cost".
A high-cost area is exactly what it sounds like -- a city, town or county in which homes are more "expensive" as compared to national and regional averages.
For example, Loudoun County, Virginia along with the rest of Washington, D.C. Metro area (e.g.; Potomac, MD; Bethesda, MD; Alexandria, VA) are considered high-cost, as is nearly all of California, and areas including Eagle County, Colorado in which conforming loan limits extend to $625,500.
Not all high-cost areas allow up to $625,500, though. The tony enclave of Athens, Ohio -- home to Miami University -- gets the high-cost treatment but with a conforming loan limit of just $432,500.
Not all "expensive" areas are designated high-cost, however.
Despite home prices rivaling those of San Francisco, Malibu and New York City, the city of Chicago fails to earn the high-cost loan limit treatment, as does its surrounding luxury neighborhoods which includes Highland Park, Winnetka, and Hinsdale.
The same is true for Lower Merion, Pennsylvania -- a Philadelphia suburb recently named the fifth-highest earning suburb in the country, and in which the median home sale price is $553,500.
Like the Chicagoland area, which extends south through Calumet City, north through Waukegan and west through Joliet, the median home price in Lower Merion's metropolitan statistical area is lowered by its surrounding towns.
In Lower Merion, Pennsylvania, as in Chicago, Illinois, the local conforming loan limit is $417,000. Loans in excess of that amount are considered jumbo.
With its 2013 Loan Limits release, the government left an unintended consequence of its various stimulus programs untouched
With names like the American Recovery and Reinvestment Act of 2009, Public Law 111-88, and Public Law 111-242, these programs temporarily raised the conforming loan limits in high-cost areas to as much as $729,750 beginning July 1, 2007 and lasting through September 30, 2011.
Effective October 2011, though, loan limits returned to $625,500, leaving scores of homeowners with new conforming mortgages too big to get refinanced. As mortgage rates have dropped, this "unrefinanceable" problem has been more pronounced. HARP 3 may address this issue, if HARP 3 -- also known as #MyRefi -- comes to pass.
HARP is the mortgage for underwater homeowners.
Whether you're buying a home or refinancing one, mortgage loan limits for your area influence the mortgage rate you get for your home.
Fixed-rate mortgages within loan size limits almost always get a better rate versus comparable jumbo fixed-rate mortgages. Conforming loans tend to require fewer loan fees, too. To get your local conforming and jumbo loan limit, click here for an online lookup table. FHA loan limits are on the chart, too.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2014 Conforming & FHA Loan Limits
Mortgage loan limits for every U.S. county,
as published by Fannie Mae & Freddie Mac, and the FHA.