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NEW 2023 Conventional Loan Limits

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Let's anticipate 2023 with Conventional loan

Conventional Loans now have new loan limits for 2023 or the least anticipated loan limits. So Conventional Loan is one of the most popular types of loans for first-time home buyers. The minimum down payment is 3%.

New Conventional Loan Limit

Now there is a limit to how big of a loan you can get and how maximum of a purchase price you can get with a conventional loan. So in 2022, this was $647,000. Now, in 2023, this is likely going to increase to $715,000. Now one quick note here, this is unofficial. FHFA has not actually released its loan limits yet. But lenders have increased them artificially, which I will explain later.

Limit can increase, how?

So this here is the maximum loan you can get right now on a conventional loan for a one-unit primary residence. If you're getting something like a two to four-unit home, that limit will increase. And there are also what are called high-cost-of-living areas where that limit is actually increased even further.

So this is a $68,000 increase or 10.5% from last year to this upcoming year, and really it's on the lower end compared to how much home values have been increasing.

What is FHFA?

So FHFA is the government organization that oversees conventional loans for Fannie Mae and Freddie Mac. And basically, as home values increase, they increase the loan limit as well to make conventional loans more accessible as home prices increase.

What the difference between 2022 and 2023?

So these are just the loan limits here. Your Maximum Purchase Price is actually a little bit higher. So again, for first-time home buyers, the minimum down payment is 3%. So in 2022, if you put 3% down, you could buy a home that's $667,000 or in $10. And then on in 2023 with 3% down, that would be $737,000 in an extra 113. So just a little bit over $737. Now, something interesting to note is in high-cost-of-living areas, you do have to have what's called a High Balance Conventional loan.

And these do require 5% down, even if you're a first-time home buyer. So something to keep in mind here is that you might have to put in a slightly higher down payment if you're in a high-cost-of-living area. And there is a map that I'm gonna be showing you here in just a minute. Now also, even though these were the loan limits here, right?

You can still put a higher down payment, you know, you could purchase a million-dollar home, and as long as your loan is $715,000 or less, you can still get a conventional loan. It's just that the minimum is 3% down and it's 5% down if you're in a high-cost-of-living area.

Now, why do lenders do this?

Ultimately, it's just for more business. So what ends up happening is the FHFA, they set the limits usually in November for the upcoming year based on their home price index. So what lenders have done recently is they're trying to kind of beat each other to the announcement.

So instead of waiting for the new loan limit to be released, they take a really educated guess on whatwithout a loan limit is going to be, right? Because it's October 4th right now. And they're like, well, if we can get a month's extra worth of business of people who want these higher loan amounts, then that's, you know, more business for them. And then what they'll do is they'll keep that on their books and then they can go and sell that to Fannie Mae or Fannie Mac in the future when those loan limits do increase.

FHFA House Price Index

So this is the FHFA House Price Index and it shows that this is up about 14% from last year. So the increase in loan limit was around 10 point half percent when the actual home price index increased just about 14% here. Also wanted to show you here on page six, let me zoom out just to touch what the home prices have done. Compound annual growth since 1991. 4.5% annual growth since 2008, 4.8 and growth since 2012 is 7.9 and we're actually seeing the first bit of change here is actually a decline in home prices since this incredible increase in the value of homes here. And so this is why that loan limit here is increasing is because of the trajectory here of home prices and this is what they're basing the loan limit off of.


Now really quickly, I wanna have just a quick moment of calm, because the more calm you have in the home buying process, the better decisions you're gonna make, the less stress that you're gonna have, and the more fun you're gonna have through the home buying process. I think as we see these loan limits increase, there's a lot of this fear that comes into play of like, Oh my gosh, like things are gonna get even more volatile, even more unaffordable. And it's okay to sit with that fear for a little bit.

What can often end up happening are we get into a little bit of a spiral of seeing. All of this stuff happening, these new changes that are happening, and it really can set us in a really bad spot. And what I think happens for a lot of people is they get stuck in the news cycle of even home-buying news and seeing updates even like this.

And so if you're in that spot where you're feeling really overwhelmed, you're feeling stressed, take a moment, take a weekend, take a week, take a month, whatever you need to pull back for just a moment if you have the ability to, because if you can get into a more calm space when you're buying a house, you will make better decisions.

You're gonna make better financial decisions, better decisions on your timing, better decisions on where you want to live, and the decision ultimately of purchasing a home or selling your current home. So if you're in that spot, you're feeling overwhelmed and stressed, it's okay to take a break. To pull back for a moment, regroup, regather, and then figure out what you want to do moving forward.

Four Main Lenders

So there are four main lenders right now who are doing this change. Again, cuz this is not an official 2023 Loan Limit released by FHFA. There are four lenders who have said, We're going to do this in anticipation for this change. That's Rocket Mortgage, PennyMac, Finance of America Mortgage, and United Wholesale Mortgage.

Now we work with all of these lenders in all 50 states plus a hundred other lenders. So if you wanna take advantage of these loan limits or you're buying something that's way less than you know $715,000, we would love to help you out, and we can help you take the next step in getting preapproved.

Loan Limit Map

Also, you can check out the Loan Limit  Map for 2020. This is gonna show you those high costs of living areas. Everything in gray is that standard limit, which likely next year will be $715,000. And this is also where you'll be able to get a loan right now for $715,000 through us if you would like to.

The orange and the yellow, are high-cost-of-living areas. So we can see from last year from 647,200. In a high-cost-of-living area. Lucky Davidson County went up to 694,600 in an area like San Benito County that's $970,800.

How can you Win the House You Love

So if you're in that spot where you want some help, you want some mortgage advice, you wanna get a quote or you wanna get preapproved, we would love to be able to help you out.

We work as a broker in all 50 states, and the way that you can do that is to go to WTHYL - Lender from there, all you have to do is pick what state you're looking in, either Ohio, Kentucky, Florida, or all other states.

Then you can either start an application right now and then we'll get back to you with a quote and a preapproval, or you can schedule a call if you have questions, and you wanna work through those before you start on an application.

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Kyle Andrew Seagraves is Federal Mortgage Loan Originator (NMLS 1701021) licensed in all 50 states with the Dan Frio Team at Allied First Bank (NMLS 203463), an Equal Housing Lender. Separately, Kyle owns Win The House You Love LLC, an education company. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This website is only for educational usage. All calculations should be verified independently. This website is not an offer to lend and should not directly be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate, legal, and/or financial advice.

Allied First Bank is not affiliated with the VA, FHA or any other government agency. This site has not been approved by any government agency.
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