The Home Team powered by USA Mortgage recently announced that they will now offer conforming loans limits of up to $625,000.
This applies for all the US counties where the conforming loan limits are only $548,250 for a single-family home. This is significant because most mortgage lenders in the US are limited to the base conforming loan amount of $548,250.
What does this mean and how do consumers benefit?
If you are buying or refinancing a home in a county where the prevailing conforming loan limits are only $548,250, you can now qualify for a loan amount of up to $625,000. In addition, the newly expanded mortgage loan limits will follow similar guidelines established by both Fannie Mae and Freddie Mac.
The Home Team powered by USA Mortgage will also follow the same guidelines with respect to credit score, downpayment, qualifying ratios, etc. However, a full appraisal of the property is required for these expanded loan limits to apply.
So, for example even in Spokane county in WA, you can buy a $657,894 home with only 5% down which you wouldn’t have been able to otherwise because with other lenders it will be considered a Jumbo loan and will require a much higher down payment (typically 10%) and charge a higher interest rate.
To further expand on the example purchase price of $657,894 for a single-family owner-occupied home, the following outlines the differences with these newly expanded loan limits.
Scenario: County Loan Limits for a Single Family Home is $548,250. (column 1 below)
Current: Limited to a max purchase price of $577,105 assuming a 5% down payment. (column 1 below)
New Expanded: Greater purchasing power of $657,894 assuming a 5% down payment. A difference of $80,789 in purchase power! This is broken down in the example below. (column 2 below)
Expanded Payment Breakdown below:
Current: For the majority of lenders that are restricted to the current loan limits the cost to the consumer is greater in both the down payment required and the interest rate charged. For example, if a consumer wants to purchase a home for $657,894 and has a total liquid savings of $75,0000 available, they would be required to put down 10% or $65,894 and the loan amount of $592,104 would be subject to higher cost jumbo loan rates (column 3 above) because it exceeds the existing conforming high balance $548,250 loan limit.
Greater Purchasing Power
With The Home Team powered by USA Mortgage’s newly expanded loan limits this same consumer only needs to allocate a 5% down payment of $32,544.50, leaving them with an equal amount of $32,544.50 (versus a 10% down payment of $65,894) in liquidity and only be charged prevailing conforming high balance interest rates versus the higher jumbo rates.
Benefits: Expand your home purchasing power and potential net worth over time. Keep more of your liquid funds in the bank. Save on interest expense. Build greater long-term wealth.
If you are getting a mortgage in a county where the loan limit is already high (called High Balance or Super Conforming) then you can get the higher of the two. For example, in Snohomish County in WA State, the loan limit is already $776,250for a single-family home.
Expanded Loan Limits:
Here are the base loan limits offered by Home Team powered by USA Mortgage with immediate effect:
If you have any questions or if you would like to review what your options are with these new expanded guidelines, feel free to contact us HERE.