Up until recently, home buyers looking to buy a home in more expensive areas were left in limbo. Here’s why: Lenders had tightened the requirements on jumbo loan options making it hard to qualify for, or they did not offer them at all. Other loan options (conforming and/or government) were also not ideal for their needs even if they qualified. Here’s the good news: Each year, loan limits are set for conforming and government loans based on the housing market, economy, and inflation. Starting January 1, 2019, the loan limits for majority of areas in the United States were raised for conforming and popular government-backed loans to $484,350 for single-unit properties.
Click here to see your state’s FHA loan limits 2019
The main obstacle for a home buyer looking for a home valued over the amounts charted above is buying down the price to make the home valued at or lower than the loan limits. Just a few years ago, many home buyers may not have qualified for a jumbo loan or could not buy down the home value to meet conforming loan limit guidelines. What was the result? Passing up the home of their dreams.
If you can relate, contact a mortgage consultant to review your options:
Option 1: High-Balance Conforming
Not only did the limits increase for conforming and government-backed loan options to keep up with rising home values, many states have counties that are considered high-cost. In other words, an area can be deemed high cost if the median home values are over $484,350, the standard limit for areas not deemed high-cost. With high-balance conforming loan options you can get a conventional (3-5% down) or government loan, such as FHA (3.5% down), on a more expensive home and still reap the benefits of low down payments.
Check to see if your county or desired home’s value is considered high cost
Option 2: Jumbo
As you can see, there are not many high-cost counties in the US, which makes it even better that the jumbo market is back… and with more relaxed guidelines than in recent years! For the last 10 years, lenders tightened the requirements on jumbo loans to the point that it was too hard to qualify, or they didn’t want to offer them at all. Today, the economy has slowly repaired itself, and lenders are more confident in offering a wider product selection when it comes to jumbo loans.
Stronger economy + rising home values + more stable housing market =
THE LOOSENING OF GUIDELINES
If you did not qualify for a jumbo loan years prior, now is a great time to try again!
- You don’t need an excellent FICO score
- Less than 20% down payment options
- Options that don’t require income tax returns
- Lower reserve requirements in bank or investment accounts