🏡💰 Homebuying affordability gets a boost

FHFA raises conforming loan limit to $766,550 for 2024, helping home affordability ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ [Better] [Better]( This week's mortgage rates [Rate chart] [Rate chart]( Source: US average mortgage rates from [FreddieMac]( --------------------------------------------------------------- Better Mortgage Interested in today's rates? [See Better Mortgage rates]( --------------------------------------------------------------- #FundFact 🏡 In the early 1970s, the national conforming loan limit for single-family one-unit properties was as low as $33,000.¹ [Rate chart] [Rate chart]( Source: [Investopedia]( Things to know FHFA raises conforming loan limit to $766,550 for 2024 FHFA raises conforming loan limit to $766,550 for 2024 At the end of last month, the Federal Housing Finance Agency (FHFA), announced the updated conforming loan limit for mortgages for 2024. The FHFA is the regulatory agency for Fannie Mae and Freddie Mac, which is responsible for determining the conforming loan limit each year. As of January 1, 2024, the conforming loan limit will rise from $726,200 to $766,550—a 5.5% increase.² What is the conforming loan limit? In order to understand the importance of conforming loan limits, you’ll first want to have a basic understanding of the different mortgage loan products that are available to buyers and the way the secondary mortgage market works. At their core, conforming loan limits exist to help differentiate a conventional loan from a jumbo loan. A conforming, or “conventional,” mortgage loan is any type of home loan that is guaranteed by a private lender or government sponsored entity (GSE). Mortgages that exceed the conforming loan limits are known as nonconforming, or “jumbo,” mortgages. In general, the costs associated with jumbo mortgages can be higher than the cost of conforming mortgages. In addition to pricing, jumbo mortgages exceed the conforming loan limit so they are not insured by Fannie Mae or Freddie Mac which means lenders take on more risk when they originate these kinds of loans. That means that qualifying for a jumbo loan often has more strict requirements than a conforming loan. In short, the secondary mortgage market is a marketplace where investors buy and sell mortgages that have been securitized. Securities are bundles of individual loans that have been packaged together. The significance here is that banks and other lenders count on GSEs like Fannie Mae and Freddie Mac to insure the loans they issue and purchase individual mortgage loans to package them together into securities. The conforming loan limit determines the maximum loan amount that qualifies for purchase by Fannie Mae and Freddie Mac. How is the conforming loan limit determined? Conforming loan limits are set by the FHFA annually and announced each November for the following year. [The conforming loan limits for each year are posted on the FHFA’s website](. Conforming loan limits are designated by county—majority of counties in the US fall under the baseline conforming loan limit ($766,550 for a one-unit in 2024), but certain counties are identified as “high-cost areas” that have their own loan limit. There are high-cost areas within the following states: California, Colorado, District of Columbia, Florida, Hawaii, Idaho, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Utah, Virginia, Washington, West Virginia, Wyoming. The updated conforming loan limit in designated high-cost areas for 2024 is $1,149,825. The conforming loan limit is calculated based on a permanent formula that was established under the Housing and Economic Recovery Act (HERA) of 2008. The FHFA uses this formula to compare home-price data in the third quarter of each year, and then adjusts the limit by the corresponding amount. Home prices increased 5.56% on average between the third quarters of 2022 and 2023 which is why the conforming loan limit is going up by the same percentage in 2024.² How does the conforming loan limit impact buyers homebuying budget? The conforming loan limit helps determine if a loan amount will require a conforming or jumbo mortgage. Since jumbo loans exceed the conforming loan limit, they often come with a higher-interest rate compared to a conforming loan. Increasing the conforming loan limit may help some buyers more easily qualify for a home at the higher end of the price scale without having to worry about jumbo loan pricing and costs. The increase in the conforming loan limit in 2024 could mean savings for borrowers on their monthly mortgage payment and may open the door for some buyers to increase their homebuying budget. If you’re interested in learning more about home affordability or building a homebuying budget for yourself, give our free [Home Affordability Calculator]( a try. --------------------------------------------------------------- Better Mortgage Make strong offers with a One Day Verified Approval³ [Get started]( --------------------------------------------------------------- Press play Follow us on social to stay up to date with the latest mortgage tech, tips, and tools: Watch on [TikTok]( • [Instagram]( • [YouTube]( • [Facebook]( --------------------------------------------------------------- Better Mortgage Questions? Connect with a mortgage expert now [Get pre-approved today]( --------------------------------------------------------------- Quiz What does DTI stand for? - Disability, Taxes, Insurance - Downpayment to insure - Debt to income - Debt to investment [Better] [Better] [social]( [social]( [social]( [social]( ¹ Source: [FHFA]( ² Source: [Housingwire]( ³ See [One Day Verified Approval terms and conditions]( © 2023 Better Home & Finance Holding Company and/or its affiliates. Better is a family of companies. Better Mortgage Corporation provides home loans; Better Real Estate, LLC and Better Real Estate California Inc License # 02164055 provides real estate services; Better Cover, LLC sells insurance products; and Better Settlement Services provides title insurance services; Better Connect, LLC dba Better Attorney Match provides real estate attorney connection services; and Better Inspect, LLC provides home inspection services. All rights reserved. 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