2019 loan limits increase to $484,350 for most areas
Conforming (Fannie Mae and Freddie Mac) loan limits are up — way up — and it could benefit home buyers and refinancing households in 2019.
According to the nation’s housing agencies, conventional / conforming loan limits were not keeping pace with the trend to “buy bigger” as this decade nears its end.
Home buyers and refinancing homeowners can finally get a bigger mortgage — up to $484,350 nationwide, and even more in high-cost areas.
That comes as welcome relief. Although jumbo loan mortgage rates are a screaming deal, they are difficult to qualify for. Many applicants would rather stay within conforming limits — especially if they don’t have perfect credit and a large down payment.
Now, home buyers can get a very large mortgage at ultra-low rates and with a down payment as low as 3%.Verify your new rate (Oct 19th, 2019)
What is a mortgage loan limit?
A loan limit is the maximum amount a lender will approve under certain guidelines.
There is not just one loan limit, but many. Conventional mortgages adhere to one set of loan limits, and FHA another. VA loans loosely follow conventional guidelines, but, technically, VA loans have no limit.
In the world of conforming loans, Fannie Mae and Freddie Mac limit “borrowable” amounts to keep their nationwide programs available to those who need them.
For instance, Fannie Mae would not want a $10 million loan going through their system. That’s a lot of risk wrapped up in one loan, and the agency would rather issue many smaller loans to those buying typical homes.
Loan limits are a means of standardizing loans nationwide. That gives lenders and investors more confidence in these loans, which pushes mortgage rates down for consumers.
Fortunately, loan limits were on the rise in 2018, and may head even higher this year.Verify your new rate (Oct 19th, 2019)
Conforming loan limits for 2019
Lending limits for conventional loans got a nice boost this year. They are up by nearly 7% since 2018 — for a dollar-amount increase of $31,000 — for the standard 1-unit home.
Multi-unit properties got a similar boost.
Standard 2019 loan limits are as follows.
- 1-unit homes: $484,350
- 2-unit homes: $620,200
- 3-unit homes: $749,650
- 4-unit homes: $931,600
Keep in mind that these are only “standard” limits. In higher-cost areas, buyers get higher conforming loan limits.
These “high-cost” area limits can be significantly higher than standard. Limits in these areas can range anywhere from the above-stated regular limits to the following increased limits:
- 1-unit homes: $726,525
- 2-unit homes: $930,300
- 3-unit homes: $1,124,475
- 4-unit homes: $1,397,400
Areas such as Alameda County, California, Arlington, Virginia, and Jackson, Wyoming are at the top of the limits, while cities like Seattle, Washington and Baltimore, Maryland fall within the “floor” and the “ceiling”.
Even higher apply in Hawaii, where a 1-unit home’s loan limit ranges from $726,525 to $1,397,400, depending on the county in which it lies. Guam and the US Virgin Islands also benefit from higher loan limits.
What if my loan is over the conforming limit?
Remember that the conforming loan limit applies to the loan amount, not the home price.
For instance, a buyer is purchasing a 1-unit home in Boulder, Colorado where the limit is $626,750. The home price is $1 million, and the buyer is putting $450,000 down.
This buyer is eligible for a conforming loan. The final loan amount is $550,000 — well within limits for the area.
Still, many applicants will need financing above their local limit. For them, a number of solutions exist.
Perhaps the most cost-effective method is to choose a piggyback loan. This describes a loan in which a first and second mortgage are opened simultaneously.
Typically, this structure is used to avoid private mortgage insurance. A buyer can get an 80 percent first mortgage, 10 percent second mortgage, and put 10 percent down.
However, these loans are available for those putting 20 percent down or more. Here’s how it would work.
- Home price: $700,000
- Local conforming limit: $550,000
- Financing needed: $600,000
The buyer could structure his or her loan as follows.
- 1st mortgage: $550,000
- 2nd mortgage: $50,000
The home is purchased with a conforming loan and a small second mortgage. The first mortgage may come with better terms than a jumbo loan, and the second mortgage offers a great rate, too.
What if I’m getting an FHA loan?
FHA loans come with their own loan limits. Currently, FHA limits are as shown below, and are expected to remain the same in 2019.
- 1-unit homes: $314,827
- 2-unit homes: $403,125
- 3-unit homes: $487,250
- 4-unit homes: $605,525
You might notice that FHA’s limits are considerably lower than conforming limits. That’s by design.
That’s because FHA is designed for moderate home buyers. But, However, the FHA includes many more high-cost areas than does Fannie Mae. In fact, FHA allows higher-than-floor loan amounts in more than 600 areas compared to about 220 areas for conforming loans.
What are today’s mortgage rates for these loan limits?
Mortgage rates for conforming loans are stellar, which is why so many buyers consider a conforming loan before using jumbo financing.
Get a rate quote for your standard or extended-limit conforming loan. Compare to jumbo rates and piggyback mortgage rates to make sure you’re getting the best value.Verify your new rate (Oct 19th, 2019)