Good news! It looks like the real estate market could ramp back up in 2024.
In fact, a whopping 4 in 10 Americans plan to buy this year! Does that include you?
If so, you’ll want to study up. One of the first hurdles will be determining which kind of loan is right for you.
And the timing’s kind of perfect! Conforming loans, one very common loan type, just got a fresh, new makeover.
So, let’s dive into conforming loans, their benefits, and how they might just come in handy if you’re planning to buy this year.
First things first. What is a conforming loan?
Conforming loan: </strong>A mortgage that meets two criteria:
Loan limit: The dollar amount used as a ceiling when taking out a conforming loan. Think of it as the maximum amount you could possibly borrow.
Loan limit amounts change each year. That’s because home prices, real estate markets, and the economy are constantly changing, too.
They also change based on location. So, in more expensive parts of the country, loan limits are usually higher. That’s because you may need more money to afford the same amount of house.
Fannie Mae and Freddie Mac: The Federal National Mortgage Association (Fannie Mae) and The Federal Home Loan Mortgage Corporation (Freddie Mac). Basically, two financial institutions backed by the government. They provide lenders with a reliable source of mortgage fincancing with some major perks for borrowers.
The criteria they’re looking for here usually includes a certain credit score, debt-to-income ratio, etc.
So now you have the scoop. But what’s the big whoop with conforming loans? Why does this even matter?
Well, as we hinted earlier, conforming loans can come with some big benefits. If you qualify, just a few might include:
Curiosity piqued? If you think a conforming loan might be right for you, you’ll want to familiarize yourself with this year’s conforming loan limits.
The FHFA set and released conforming loan limits 2024 in late November.
This year, the limit for a one-unit property is $766,550 for most of the U.S. That’s a $40,350 jump from 2023’s limit.
Higher costs of living areas, think: NYC and San Fran, are capped at $1,149,825. That’s 1.5 times the standard loan limit amount of $766,550.
There are also some special statutory provisions for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these markets, the loan limit is also $1,149,825 for 2024.
Pro tip: Dont get your heart set on that $1 million+ loan limit just yet! The maximum amount you might qualify for relies on your location and your unique financial situation. Consult a mortgage professional to confirm whether you live in a qualifying high-cost-of-living area. Or start with the FHFA’s handy interactive ma</em>p.
So, are you sold on a conforming loan? The benefits just might be worth it, if you can qualify and find something below the loan limit.
If you’re ready to take the leap, schedule a sit down with a mortgage professional. They’ll know much more about your market and can help determine next steps.
A conforming loan won’t be quite right for everyone, though. If you don’t meet the qualifying criteria, or if you’d like to spend a bit more than the loan limit allows, don’t worry. There are plenty of other potential home loan options to take a look at.
A mortgage professional can still help you make sense of your financial situation, weigh the pros and cons, and ultimately find the right path forward.
So, do you think you can find your dream home for $766,550 or less? Or are 2024 conforming loan limits cramping your style? Either way, you’re walking away with more knowledge on one potential path forward and that’s a win.
Consider studying up on conforming loan limits, chatting with a mortgage professional, and maybe even achieving homeownership in 2024! Your local Motto Mortgage professional will be here to help every step of the way.