MORTGAGE LOAN LIMITS INCREASED FOR 2018
Loan limits are being increased for both conforming loans and FHA loans for 2018.
The Federal Housing Finance Agency (FHFA) recently announced an increase in the “conforming” loan limits effective January 1, 2018. (Click for More Info). Conforming loans are those loans which are readily saleable into the secondary mortgage market (specifically to Fannie Mae or Freddie Mac, the two government sponsored entities that purchase most mortgage loans). The FHFA annually announces a ceiling on what is considered a conforming loan. Any loan in excess of the conforming loan limit is considered a jumbo loan, which results in higher fees and costs paid by the homeowner. That ceiling is reviewed annually and increased if the FHFA finds increases in the average home prices throughout the housing market sufficient to justify higher loan limits which, in turn, increases the number of people that qualify for the more inexpensive conforming loan and is also a reflection of an improving economy.
The new conforming loan limit for single family home loans for most of Connecticut is $453,100, increased from this year’s limit of $424,100. The new limit allows more borrowers to avoid the increased costs and more selective underwriting that goes along with a jumbo loan, and helps stimulate an increased number of real estate transactions. In addition, conforming loans may be eligible for additional benefits such as low down payment programs. The conforming loan limit for Fairfield County, due to the higher cost of housing there, is now $601,450.
The loan limits for FHA loans are also increasing. FHA loans are guaranteed by the Federal Housing Administration and require a lower down payment and have more relaxed credit standards than conventional loans. The 2018 FHA loan limits for single family homes vary from $294,515 to $601,450, depending on the area of the state. For instance, in New Haven County the single family limit is $305,900,
These increases in loan limits should assist buyers in obtaining loan approvals at all levels of the housing market.