FHA AND CONFORMING LOAN LIMITS INCREASED FOR 2020
Both the Department of Housing and Urban Development (HUD), for FHA loans, and the Federal Housing Finance Agency (FHFA), for conforming loans purchased by Fannie Mae and Freddie Mac, have announced increases in the applicable loan limits for 2020. We wrote about the loan limits applicable in 2018 in this blog post [Read More].
HUD recently announced an increase in its base loan limits, applicable to loans originated in 2020 in most areas of the United States, and also an increase in the loan limits applicable in those areas deemed as having “high-cost” real estate. For a single family home, the base limit applicable for 2020 is a maximum loan amount of $331,760, an increase over the base limit of $314,827 applicable in 2019 (higher limits apply to multi-family dwellings). The base loan limit in areas deemed high-cost varies depending on the housing cost in the applicable area. In Connecticut, the highest single family loan limit applicable in parts of Fairfield County is $601,450. In the New Haven area, the base limit of $331,760 applies. The following link allows you to find the applicable limit in your county [Read More]. The increase in the FHA loan limits reflect increasing housing prices and will allow for more borrowers to be able to take advantage of FHA financing and lower down payment requirements applicable to FHA loans, which can be as low as 3.5% of the purchase price.
The FHFA annually sets the loan limits applicable to conforming mortgages purchased by Fannie Mae or Freddie Mac, the two government-sponsored entities which purchase the bulk of single family mortgages originated in the United States. The base limit applicable in 2020 has increased to $510,400, from $484,350 in 2019. That base limit can increase to as high as $765,600 in certain areas of Connecticut, such as Fairfield County, due to higher overall housing costs. Typically, loans in excess of the applicable FHFA loan limit (“jumbo” loans) are more expensive for borrowers to obtain and carry higher fees and interest rates. These higher limits will help purchasers qualify more easily for mortgages on homes in the higher spectrum of the housing market.