As most of us know, the housing market has skyrocketed in the past year. As price continues to increase, lenders are starting to offer conforming loans for these exceptionally inflated prices.
Starting on October 18th, 2021, conforming loans will be available for up to $625,000 for one-unit properties and up to $1,202,000 for four-unit properties. Current conforming loans are capped at $548,250 in 2021, which is up from $510,400 in 2020. These loan limits continue to increase and are taking their biggest leap by over $75,000.
Even with this new conforming loan limit, higher-cost markets may have even higher limits. For example, in Alaska and Hawaii, the updated baseline for a single-family unit is $937,700, which is up from $822,375.
What makes this different from a jumbo loan?
A jumbo loan is one taken out for especially high home prices. The difference is a conforming loan typically has lower interest rates and are easier to qualify for.
Benefits of the increased conventional loan limit
3% down payment, 10% down for second homes
Flexibility - it can be used for purchase, refinance, or build a primary residence, second home, or investment property.
PMI cancellation or reduction
Easier to qualify for those who have outstanding student loan balances
Overall, these new limits will make home-buying more accessible to people in all different stages, whether it be your first property or investment property.
Interested in learning more about different types of loans?
Think you’re ready to buy your dream property? Schedule a call with us today and we can determine what loan suits you best!