It is not a question that all of us realized the importance of home during the pandemic. The close relationship we formed with home has lead to many individuals assessing their needs as it relates to their current living situation - from renters looking to make roots and buy, to existing home owners trading up, the pandemic has spurred activity within the housing market.
When it comes to buying a home, the 2 most common roadblocks that buyers may face are the ability to save for a down payment - something that has been typically challenging for student-debt ridden millennials, and qualifying for a mortgage at current lending standards.
Last week, the FHFA announced that it will be raising the loan limits for Confirming Loans in 2022.
Confirming Loans are the only mortgages that meet the requirements to be acquired by Fannie Mae and Freddie Mac. Any loan that exceeds the confirming limit is considered a non-confirming, or Jumbo Loan.
There are quite a few differences, both pros and cons, to conforming vs. non-confirming loans, however, typically a non-confirming loan has a higher interest rate and down payment requirements because of the risk of the loan. In pricey housing markets, even purchases at the lower end of the market can force buyers into the jumbo loan territory.
The FHFA indicated in a Press Release that the Confirming Loan limit will see a significant increase to $647,200 and that approximately 100 counties will have confirming loan limits approaching $1 million.
What does the increase mean? More homes will now qualify for conforming loans which have lower down payment requirements and easier lending standards. For example, a home that you could afford with 10% down but would result in a non-confirming loan that required 20% down, may now fall into the confirming loan limit allowing for 10% down.
That dream home that you thought was out of reach, may just have become a little bit closer!
Connect with us today to discuss these changes and how they may impact your purchase consideration.