Home Loan Limits are Increasing! What You Need to Know…

 

There’s great news for people who have been trying to buy an East Bay home for sale and finding themselves priced out: The conforming loan limit is increasing on Jan. 1, 2019.

The FHFA announced it is raising conforming loan limits for Fannie and Freddie mortgages in nearly every part of the U.S. by 6.9 percent.

“This is going to affect people’s ability to buy in a positive way. Now that loan limits are increasing, buyers who have been struggling to enter the market could potentially have a lot more buying power,” says Abio Realtor Krista Miller, who is working to spread the good news to her clients.

For most of the nation, the maximum conforming loan limit for one-unit properties will be $484,350 in 2019, an increase from $453,100 in 2018.

If that doesn’t sound like much for East Bay homebuyers, you’re right. But don’t worry. The FHFA has taken into account the Bay Area’s stratospheric median home prices.

Here’s what you need to know about the new conforming home loan limits...

 

East Bay counties breakdown

 

The FHFA is granting different loan ceilings for high cost regions including the Bay Area. Below are the 2019 conforming loan limits for mortgages in Alameda and Contra Costa counties acquired in calendar year 2019:

• One-Unit Limit - $726,525
• Two-Unit Limit - $930,300
• Three-Unit Limit - $1,124,475
• Four-Unit Limit - $1,397,400

 

Putting it in perspective

 

Mortgage analyst Andrei Paduraru with JVM Lending, one of our Abio partners, helps put those numbers into perspective for people looking at homes for sale in the East Bay:

“The impact it is going to have, especially in a market like ours, is making it more affordable for people to move up in price points when they don’t have a large down payment,” Andrei says.

So, if you are looking at that $726,525 limit, you can now consider a $800,000 property with 10 percent down.

“Prior to this limit, you were only able to go to $750,000. This means you now have an additional $50,000 in buying power,” Andrei explains.

 

A chance to avoid a jumbo loan

 

This is great news in a region where the median price paid for homes in Alameda County was $825,000 and $610,000 in Contra Costa County this fall.

“We were finding that a lot of buyers, even if they had strong income and strong credit, were capping out at the $679,650 limit (for 2018),” Andrei says.

One alternative – and not an ideal one – for Bay Area borrowers has been to take out non-conforming or “jumbo loans,” which typically have more stringent income, credit, and liquid reserve requirements.

The new, higher FHFA loan limits will allow more borrowers to get into homes with much smaller down payments and much less stringent underwriting standards than jumbos.

 

Learn more for the new year

 

Andrei has noticed that many hopeful homebuyers aren’t aware of the changes yet, but lenders and real estate agents are working spread the word.

If you have any questions about what you can afford or how to finance your next home, please contact Abio's expert real estate agents at 888-400-ABIO (2246) or [email protected]. Or refer to Abio’s list of local lenders who frequently partner with our clients.