1st Priority Mortgage, Inc. is pleased to announce that we are increasing our single-unit conforming loan limit to $726,200 on Jan. 1, 2023. This is good news for borrowers since conforming loans are the most common type of loans on the market.
The increased loan limit for one-unit properties will help give borrowers greater purchasing power in the face of home prices that remain high. The higher loan limit will also offer 1st Priority Mortgage greater flexibility on mortgages up to $726,200, and help many homeowners secure larger loans with lower rates.
Conforming loans are attractive for borrowers because they’re easy to qualify for, and they’re backed by Fannie Mae and Freddie Mac. The limit for these loans is set by the Federal Housing Financing Agency (FHFA), which adjusts rate limits every year to reflect changes in the average U.S. home price.
The Housing and Economic Recovery Act (HERA) requires that the limit for these loans increase proportionally to meet the average U.S. home prices. Between the third quarters of 2021 and 2022, the average home price increased by approximately 12.21%. To keep up with this price growth, the baseline conforming rate loan will increase from $647,200 to $726,200 – a 12.21% increase.
HERA sets a higher baseline loan rate for areas where 115% of the local median home value exceeds the baseline loan limit. The loan limit for these high-cost areas can increase up to 150% each year in order to meet rising prices in these markets. In 2022, median home values increased in 2022, so the FHFA has increased the loan ceiling from $726,200 to $1,089,300 – a 150% increase, in line with HERA limits.
To learn more, contact a 1st Priority Mortgage loan originator today! We’ll be happy to help you explore your options for a single-unit conforming loan.