As home prices increase across the country, upper limits for conventional loans are also on the rise.
Recently Finance of America Mortgage (FAM) announced that it has temporarily increased conforming loan limits “to help borrowers overcome rising home prices,” according to Mortgage Professional America (MPA), an industry news source.
Those limits will now be $625,000 for a single-family home; $75,000 for one-unit homes in some markets and almost $150,000 for four-unit homes in some markets.
The new limits will allow buyers to qualify for loans that carry a lower interest rate than the jumbo loans they would have previously required.
FHFA is expected to follow suit for Fannie Mae and Freddie Mac loans in 2022 by raising its loan limits, according to MPA.
In other loan news, a recent New York Times article examined the problems veterans have using VA loans, due to misconceptions that the loans are often mired in bureaucracy and red tape and commonly fall apart before closing. In the past, this belief has led to sellers choosing buyers who aren’t entangled with VA loans.
However, the Times reports, “Today, V.A. loans actually close at a higher rate than conventional mortgages. For all home purchases in June 2021, 70% of V.A. loans successfully closed, compared with 51% of all mortgages, according to Ellie Mae, a mortgage application software company.”
Their use, notes the article, has been on the rise for the past 10 years and increased 8% from 2020 to 2021.