What Is A Conforming Mortgage "Loan Limit"?
A
"conforming mortgage" is so named because its loan traits -- quite
literally -- "conform" to the loan rules set forth by Fannie Mae or
Freddie Mac. Fannie's and Freddie's mortgage guidelines are dense,
covering thousands of home loan traits, but there is one over-reaching rule --
neither Fannie Mae nor Freddie Mac will securitize a mortgage that's considered
"too big" for its books.
Defining "too big" is an annual decision-making process based on the economy and home price data. The debate results in a "loan size limit"; the maximum amount of mortgage that Fannie and Freddie will allow, per their respective home loan guidelines. Loan sizes up to these maximum amounts can be conforming mortgages. Loan sizes beyond the conforming loan limit are considered "jumbo".
2012 Conforming
Mortgage Loan Limit : $417,000 (Or More):
2012
conforming loan limits are the same as in from 2011, 2010, 2009, 2008, 2007 and
2006.
Home prices
are lower today as compared to 6 years ago, but maximum loan sizes are not; and
this makes more homes eligible for Fannie Mae/Freddie Mac
financing. For home buyers, this is a good thing because Fannie Mae- and
Freddie Mac-backed loans are often the "cheapest" form of financing
in terms of monthly mortgage payment.
Loan limits staying steady is good for existing homeowners, too, because, should conforming loan limits ever fall, scores of households would be immediately "loan-sized out" from the refinance market.
The 2012 conforming loan limits vary by property-type. With more "units" per property, conforming loan limits rise. The classification "1-unit home" includes single-family residences of all types -- detached homes, row homes, townhomes, condos and co-ops.
- 1-unit
properties : 2012 conforming loan limit of $417,000
- 2-unit
properties : 2012 conforming loan limit of $533,850
- 3-unit
properties : 2012 conforming loan limit of $645,300
- 4-unit
properties : 2012 conforming loan limit of $801,950
Note that these
limits are for conforming mortgages only. FHA loan limits -- including for the
FHA Streamline Refinance -- use a different scale.
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