For today's podcast we discuss the new 2023 loan limits. When you apply for a loan your limit has now increased thanks to recent announcement from the Fed. The Federal Housing Finance Agency (FHFA). Conventional loans that meet these standards are called conforming loans. That limit has now increased and we discuss the changes and how your clients can benefit.
The FHFA sets conforming loan limits for Fannie Mae and Freddie Mac, the two government-sponsored enterprises that it regulates. Fannie Mae and Freddie Mac purchase mortgages that meet their standards from lenders and then repackage them into mortgage-backed securities for investors. This process gives lenders the liquidity needed to continue providing borrowers with affordable mortgage loans.
Both Fannie Mae and Freddie Mac have additional criteria for the loans they purchase, including minimum credit scores, minimum down payments and maximum debt-to-income ratios (DTI). But in general, when people talk about conforming loan standards, they’re talking about loan limits. So, what exactly are these limits? The baseline conforming loan limit for 2023 is $715,000 – up from $647,200 in 2022.
The limit is higher in areas where the median house cost exceeds this number, so borrowers in high-cost areas can get conforming loans of up to $1,073,000 for a 1-unit home depending on the limit in their individual county.
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