In the world of mortgages, the term “conforming loan limit” may sound a bit technical, but it has a significant impact on many homebuyers. Understanding its implications is essential, especially if you’re considering a VA home loan. In simple terms, the conforming loan limit is the maximum loan amount that can be backed by government-sponsored entities like Fannie Mae and Freddie Mac. It’s important to note that this limit can vary slightly depending on the county you live in, taking into account the cost of living and housing market conditions in your area. In 2023, the national limit is set at $726,200, but some counties may have slightly higher limits. As we head into the new year, there have been reports that we should be expecting changes to the VA conforming loan amount.
Understanding Jumbo Loans and Non-Conforming Mortgages
For those looking to purchase homes that exceed the conforming loan limit in their county, they often turn to what’s known as a “jumbo loan.” A jumbo loan is a non-conforming mortgage, meaning it doesn’t meet the criteria set by Fannie Mae and Freddie Mac. While jumbo loans can be a viable option for higher-priced properties, they typically come with stricter lending requirements, including a higher credit score.
The key ramification of not staying within conforming guidelines is that you may face higher interest rates and more demanding qualification standards. Jumbo loans are considered riskier for lenders, which is why the terms can be less favorable for borrowers.
The Loan Limit Increase and What It Means for You
As we look ahead to 2024, there’s an exciting development on the horizon—the potential increase of the conforming loan limit to $750,000. Now, you might be wondering, “How does this specific change affect me as a borrower?” Well, it’s great news for those in the market for a new home. With a higher loan limit, you gain increased borrowing power. This means you can consider homes in a higher price range while still benefiting from the favorable terms of a conforming loan, such as lower interest rates and more accessible financing.
Embracing the Opportunity
The upcoming change in the conforming loan limit is an exciting opportunity for homebuyers, especially if you’re interested in a VA home loan. At Creekside Mortgage, we are experts in the field of VA purchasing, and we’re here to help you make the most of this new development. Whether you’re a veteran or an active-duty service member, we understand the unique aspects of VA loans and can guide you through the process to maximize your benefits. If you’re looking to become a homeowner in 2024 and want to harness the full potential of the increased loan limit, don’t hesitate to reach out to us. We’re dedicated to helping you achieve your homeownership dreams, and this change only adds to the possibilities available to you. We look forward to being a part of your journey toward a new home in the year ahead.