Home Loan Providers In The US Have Increased The Upper Loan Limit To $510,400
03 Jan 2020
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- House loan limits have been increased in the US up to $510,400.
- An increased limit would allow borrowers to buy a more expensive home without making any down-payment as long as they stay within the upper loan limits.
- VA loans no longer carry a limit on the amount that may be borrowed to buy a house in the US.
The new year has brought with it a higher loan limit for all those wishing to buy a home in the US. According to reports, the Federal Housing Administration (FHA)-insured loans and those being offered by Freddie Mac as well as Fannie Mae would now have a higher cap, allowing borrowers to get more funds and enabling them to buy a more expensive home with debt than previously possible. Loan limits are correlated with the median prices of homes in different counties across the US. FHA loans need to have a limit of 115% of the median price of a home, by law, which means the loans would have a cap of $331,760 this year. This is $17,000 higher than the cap set in 2019. In counties where homes are more expensive, limits set on FHA loans would go up to $765,600 this year, around $40,000 higher compared to 2019 limits.
According to reported figures, the upper limit set by Fannie Mae as well as Freddie Mac on one-unit property loans has been increased from $484,350 to $510,400 at the start of 2020 in most areas of the US. In Washington, the limit has been set at $765,500, considering the expensive housing market of this region. In a few other regions, such as Alaska, Guam, the US Virgin Islands, and also Hawaii, different loan limits have been set. In case buyers wish to buy a house that carries a price tag requiring a larger loan limit, then they need to apply for a jumbo loan. However, this loan would require a larger down-payment to be made at the beginning of the loan, and also the approval rate is lower compared to house loans that are within the capped limit. The higher limits come at a time when the housing market has witnessed a surge in prices around the US, accommodating for the hike in prices to make sure people are able to access financing for their desired home. Both the FHA and Fannie Mae/Freddie Mac have also developed online tools that provide instant information about loan limits available in a specific area. The FHA limits can be found here
, while the Fannie Mae/Freddie Mac limits can be found here
. Also, house loans that are available to veterans and active members of the military, called VA loans, do not carry any limits on them anymore. In the past, these groups were asked to deposit 25% of the total cost as downpayment in case the total amount exceeded the loan limit. However, the eligibility criteria would still need to be met for borrowers to get approved for a house loan, and lenders still reserve the right to limit the amount they eventually lend on VA loans or require borrowers to have a high credit score in case they require a large loan.