Hot off the press: The Federal Housing & Finance Agency is increasing the Conforming Loan Limits for 2021, and the FHA will likely follow. For buyers, this means more loan options (and more house!) with a reasonable down payment. For REALTORS® this means you’ll be able to better help your buyer pool in a market where demand is high and supply is low. Listen in as I break down the new loan limit numbers, what they mean for conforming and jumbo loans, and how to distinguish between FHFA & FHA loans —and hear why having a loan professional you can trust is paramount to getting the best loan possible.
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Time Stamped Show Notes:
- Big News: The Federal Housing & Finance Agency is changing the Conforming Loan Limits for 2021
- What does this impact?
- When loan limits increase, it means you can buy more house with a reasonable down payment and the loan is backed by the FHFA (Fannie Mae & Freddie Mac)
- The new Maximum Conforming Loan Limit for a single unit property is $548,250 from this year’s $510,400
- You can now do a 5% down payment on a purchase up to $577,100
- You don’t have to have 20% down, there are amazing loan options at 5% down; talk to your REALTOR® and loan professional to learn more about your options
- I’m getting the inside scoop from Brian Floyd, my preferred lender who’s a pro and gives personalized advice
- Information on jumbo loans
- Jumbo loans are loans for amounts larger than the conforming loan limit and the pricing number is different
- These are for luxury homes; you’ll need a higher credit score (720 and up)
- If your credit score is less, you can do a 5% down conventional but will have lower loan limits
- Jumbo loans typically require 20% down, sometimes 10%; there are some 0% doctor loans, but you’ll need reserves, great income, and great income verification
- Underwriting for jumbo loans typically takes a little longer to confirm everything
- Other loans: Sandwich loans, stacker loans, combo loans, 90-10-10, 80-10-10; all these have adjustments on pricing and a second underwriting
- Have a loan professional you can trust; there’s a lot to consider
- Announcement coming in December: FHA loan limits are likely going to increase, too, to $356,362 (they typically follow FHFA)
- Information on the FHA loans
- It’s 3.5% down, your credit score can be a bit lower, and your debt-to-income ratio can be higher, giving you more opportunities as a buyer
- If your credit score has taken a hit, ask your REALTOR® and loan professional how to boost it
- People with FHA loans get an extra inspection because the bank has more at risk; there could be some non-negotiable repairs
- FHA folks look for paint peeling, operating windows, handrails for 3 or more steps, and other safety precautions
- FHA loans serve an important part of the marketplace; buyers will have more loan options and REALTORS® will be able to better help their buyer pool
3 Key Points
1.) There are great loans with 5% down. Talk to your REALTOR®!
2.) Get a loan professional you can trust.
3.) FHA loans are not of the devil!