If youve had your eye on a home thats just slightly too expensive to buy with the most affordable type of mortgage, you may be due for some relief.
The Federal Housing Finance Agency has announced that for 2017 it will raise the maximum size of a so-called conforming loan to $424,100 in most counties throughout the U.S. Previously, the agency capped conforming mortgages at $417,000.
Conforming loans typically are the friendliest loans for borrowers. They generally carry the lowest interest rates and relatively low requirements on down payments, which makes them easier to handle than the jumbo loans people have had to turn to if they needed to borrow more than $417,000.
Conforming loans have easier terms for borrowers because the loans can be sold by banks or other lenders to Fannie Mae or Freddie Mac, giant agencies that buy loans and get support from the federal government. Without the ability to sell a loan to an agency such as Fannie or Freddie, the lender faces the risk of having to hold onto the loan for many years.
The change to $424,100 is not huge, but it is the first increase since 2006. It recognizes that the housing market has been recovering from the crash that began about a decade ago. The housing finance agency bases its prices on housing appreciation. A few very pricey areas, such as San Francisco, have limits above $424,100.