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Understanding Mortgage Loan Limits

 

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When getting ready to purchase a home, it’s a good idea to find out what the loan limits are for conforming loans. The reason it is important, especially in states like California with high cost areas, is because it will determine what type of loan you will need to obtain. There are generally 4 types of loans with respect to loan limits such as: FHA, Conventional, High balance or Super conforming, and Jumbo loans. The below limits are based on limits as of 2018.

FHA

FHA’s general loan limits are between $294,515 and $405,950 depending on what county the property is located. To find out what the loan limit is for a specific county, FHA has a loan limit look-up page conveniently available on their website.

Conventional

The maximum loan limits for Fannie Mae and Freddie Mac conventional loans is $453,100.

High Balance and Super Conforming

A High Balance loan is a conventional loan with higher loan limits for high cost areas. A high cost area is one where the median home value is much higher than other parts of the country. Areas like Los Angeles and New York benefit from Fannie Mae’s High Balance program and Freddie Mac’s Super Conforming program. The maximum loan limits for high cost areas is $679,650. High balance loans typically have a slightly higher interest rate than regular FHA and Conventional loans.

Jumbo

Jumbo loans are intended for a loan amount that is above conforming loan limits. As with high balance loans, the interest rate will be slightly higher than conforming loans. Additionally, the minimum credit score for a jumbo is higher than that of conforming loans. The typical down payment requirement for a jumbo loan is at least 20%, although there are a few jumbo loan options that require as little as 5%.

For information about VA loans please visit their website. Although VA loans do not have a cap on the amount a person can borrow, there is a limit on the amount that the VA can assume.

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