Recent changes in mortgage loans may make it easier and cheaper to borrow.
For 2020, conforming mortgage loan limits are rising to $510,400 in most areas and $765,600 in high cost areas like Washington D.C. (The max amount first started at $417,000 after the real estate meltdown and has been inching its way upward ever since).
When you buy or refinance, using a conforming loan will help you keep mortgage loan costs down, and make the loan easier to obtain.
So what exactly is a conforming loan?
A “conforming loan” is one that does not exceed the dollar amount established by the Federal Housing Finance Agency (FHFA), and also meets standards set by government-sponsored enterprises like Freddie Mac and Fannie Mae.
That makes these loans eligible for government-sponsored guarantees, which keeps housing more affordable.
A conforming loan – one that does not exceed $510,400 in most areas of the U.S. – will have slightly lower interest rates than a jumbo loan, which is a larger mortgage exceeding the $510,400 ceiling.
The new, higher loan limits mean you can afford today’s home prices, and still benefit from lower rates and streamlined processing.
Financial Tip: What’s the maximum conforming loan amount in your area? Check here on this handy map.