Higher Loan Limits Coming in '17


As of Jan. 1, households will be able to get larger FHA loans for their home purchase. In high-cost areas like San Francisco and Washington, D.C., borrowers will be able to get loans as high as $636,150, almost $11,000 more than what they were able to get in 2016. In low-cost areas, they’ll be able to get loans for up to $275,665. That’s up from $271,050.

The higher limits stem from changes the Federal Housing Finance Agency, which oversees secondary mortgage market companies Fannie Mae and Freddie Mac, made to the limits on conforming loans. These are conventional loans packaged into securities and backed by Fannie and Freddie for sale to investors. The new limit for these loans is $424,100 in most markets, up from $417,000. It was the first increase in a decade, and it comes after NAR recommended changes to the criteria the FHFA looks at to determine what the limits should be.

“NAR encouraged the FHFA to use a number of factors that would create the most favorable result in all communities nationwide and did in fact result in an increase in loan limits,” says Megan Booth, an NAR regulatory policy representative.

The higher loan limits are a bit of good news given challenges borrowers face with interest rates and home price appreciation continuing to head up. The average commitment rate on a 30-year, fixed-rate loan was 4.30 percent the week of Dec. 22, an increase of almost 100 basis points since the middle of 2016, according to Freddie Mac data. And NAR’s latest home price appreciation rate for existing homes is more than 5 percent. For borrowers who can afford to buy, the higher loan limits will be a welcome development.

The new limits are detailed in the latest Voice for Real Estate news video from NAR.