This is going to be a video about loan amounts and loan limits. Because there are certain restrictions on how much you can borrow, not only based on your income and debt load and credit score, but in other ways. So to explain this more, go to my website, getloans.com. Click on the blog. Once there in the search box, just enter size and then click Search. And it will take you to some blogs.
There are different loan sizes allowed?
The first one is the one you want to click on: Size Does Matter, Some Loan Amounts Are Bigger Than Others. Now read the whole blog. It’s not that lengthy. I wrote it quite a ways back in 2012. But it’ll explain a little bit about an important mortgage concept, which are conforming loan limits and conforming high balance loan limits. And then the third category would be considered jumbo loans. To explain that a little further, you see this here? I wrote about the three types of loan size as conforming, conforming high balance and jumbo. Click here for more, so then click that button.
Fannie Mae and Freddie Mac control the discussion
Now, let’s go to the next blog I wrote, How Much Can I Really Get. Now. This talks in a little more detail about conforming loans, conforming high balance loans and jumbo loans. But the central point is that every year, Fannie Mae and Freddie Mac will assess median purchase prices in different counties across the country. And will adjust if needed their maximum loan amounts that they’ll lend. Those are traditionally called conforming loans. If you conform to those loan limits, then you’re getting a conforming loan.
Conforming “high balance” loans
In other high-cost areas, you may get a conforming loan that’s called a conforming high balance loan. This is where you’re borrowing above the conforming amount, but they’re still going to consider it conforming. It’s just a different class of conforming called conforming high balance. And then if you borrow above a conforming or conforming high balance loan limit in your county or your area, it’s considered a jumbo loan.
The type of property has an impact
So you see this? The first link in this blog, for current year loan limits, click here. So click there. It’s going to take us to something that I wrote. This is underwriting rules. I really wrote this for realtors. But this will give you the loan limits or links to the loan limits for VA loans, for FHA loans, and then for conventional loans. I’ll have you go to the Fannie Mae website.
So let’s go there. The Fannie Mae website will tell you current information. So here are the new loan limits for 2022. For all the contiguous states and DC and Puerto Rico for a single family home it’s $647,200. If you borrow up to that amount or under, that’s a conforming loan. On a duplex property or a two-unit home, you can borrow up to $828,700, that’s considered a conforming loan. And then there is the three-unit loan, or triplex, four-unit loan limit or fourplex. Five-unit homes and up are considered commercial loans and are not eligible for residential loans.
There are different loans amounts county by county
When you scroll down, here are what I call high balance or are also known as high-cost loan limits. These are only eligible wherever they consider a high-cost area. You need to find out if your county or your area is high cost. And I’ll tell you how to do that in a second. But if you’re in a high cost area, look how this jumps up. You can borrow up to $970,800 on a single family home, and have it be considered a conforming high balance loan. This means you could get away with a 5% down payment. That’s a purchase price in the very low $1 million range with 5% down, pretty amazing.
Now, on multi-family property you typically need 20% to 25% down. So these are going to be different. As you can see, loan amounts and how much you can borrow and the purchase price and the loan to value, it’s a bit complicated. But I want you to at least have some resources.
To find where you might be able to see if your area is a high cost area or not, go to the very bottom of the Fannie Mae page here. See where it says loan limit look up table. When you click on that, you’ll download a spreadsheet. And this spreadsheet will give you every single county in every single state in the union. You can go through and find where your county is and then see what’s the maximum loan amount. Here’s one I just saw. Boy, the print’s really small, isn’t it? You can blow up the print. Here’s Hudson County, New Jersey. That’s considered a high cost area. Clearly, its proximity to New York. Now. They go up to $970,800.
So that gives you the resources that you need to find out if your loan is conforming, conforming high balance, how much can I borrow, where. It gets to be a little complicated. You can contact your lender or contact me, go to getloans.com, click on Connect. You’ll see multiple ways, schedule a call, email, meet my team. You can connect with me on Facebook, Twitter, YouTube, LinkedIn, all kinds of ways. And I can kind of unravel the mystery for you if it seems a little complicated.
Thanks for watching, and let me know if you have any questions.