The Federal Housing Finance Agency (FHFA) announced the new 2019 Conforming Loan Limit today. The Federal National Mortgage Association (a.k.a. Fannie Mae) and Federal Home Loan Mortgage Corporation (a.k.a. Freddie Mac) baseline loan limit will increase to $484,350 on January 1, 2019 for a one-unit property. This is an increase from $453,100 in 2018.
What is a conforming loan and why is it called a conforming loan?
A Conforming Loan is a mortgage that is equal to or less than the dollar amount established by the FHFA for loans that meet the Fannie Mae and Freddie Mac criteria. They are called a Conforming Loan because they ‘conform’ to the guidelines established by Fannie Me and Freddie Mac.
In 2017, the Conforming Loan Limit was $424,100. In 2018 the Conforming Loan Limit was $453,100. In 2019 the Conforming Loan Limit for a one unit property will be $484,350. There are 100 counties in North Carolina and 97 of the 100 will have a maximum Conforming Loan Limit of $484,350. There are 3 counties in Northeast North Carolina (i.e. Camdon, Pasquotank and Perquimans) that will have a higher Conforming Loan Limit of $625,500 since they are consider a high-cost area.
Single Family, Duplex, Triplex & Quadplex
The Conforming Loan Limit for a one-unit property in 2019 will be $484,350. The Conforming Loan Limit for a two-unit property (a.k.a. duplex) will be $620,200 in 2019. The Conforming Loan Limit for a three-unit property (a.k.a. triplex) will be $749,650 in 2019. The Conforming Loan Limit for a four-unit property (a.k.a. quadplex) will be $931,600 in 2019.
Why the increase in Conforming Loan Limit?
2019 will mark the third straight years the FHFA increased the Conforming Loan Limit after they had not raised them at all from 2006 to 2016. Here is the Kevin Martini breakdown: So there is a baseline that was established via the Housing and Economic Recovery Act of 2008. Essentially it established the ‘baseline’ loan limit at $417,000 and mandated that the baseline loan limit cannot rise until home prices return to pre-decline levels.
On Tuesday (11/27/2018) the FHFA shared home prices are on the rise and required the third straight yearly increase in the Conforming Loan Limit. In fact, the FHFA shared via News Release U.S. house prices rose 1.3% in the third quarter of 2018 according to their House Price Index (HPI). The FHFA also shared hose prices rose 6.3% from the third quarter of 2017 to the third quarter of 2018. The HPI calculates this based on sales price information form mortgages sold to or guaranteed by Fannie Mae or Freddie Mac.
If you are currently in a starter or trade-up house that no longer fits your needs and you are looking to step into a luxury home, now is the time to list your house for sale and make your dreams come true with the increase of the Conforming Loan Limit.
If the right thing for you and your family is to purchase your first home, buying sooner rather than later could lead to substantial savings. Call the Martini Mortgage Group at Benchmark Mortgage so we can get together to evaluate your opportunities.
Kevin Martini | NMLS ID 143962 | Branch Manager | Martini Mortgage Group at Benchmark Mortgage | Ark-La-Tex Financial Services, LLC NMLS ID 2143 | 5650 Six Forks Road, Suite 101 Raleigh, NC 27609 | (919) 238-4934 | www.KevinMartini.com | Kevin.Martini@Benchmark.us | Equal Housing Opportunity