This change is set to go into effect in 2020, allowing borrowers to take out a larger mortgage than previously allowed while still benefiting from the reduced down payment and expanded offering of loan options that come with conforming loans.
The conforming loan limit is the maximum loan amount where the government-sponsored entities, such as Fannie Mae and Freddie Mac are able to buy a loan from the originating lender. Loans above the conforming loan limit are considered jumbo loans which often require a higher down payment and may carry a higher interest rate.
In order to obtain a conforming loan, the borrower must be qualified according to the guidelines established by Fannie Mae and Freddie Mac. These include having a good credit score, sufficient income, and adequate assets to cover the down payment and closing costs. Conforming loans also typically come with lower interest rates and better loan terms than non-conforming loans, making them an attractive option for borrowers.
For borrowers in Oregon and Washington, the conforming loan limit has increased from $484,350 to $510,400 for one-unit properties. For two-unit properties, the limit has increased from $620,200 to $653,550. This means that borrowers in these states can now borrow up to $26,050 more than previously allowed.
With the increased loan limits, borrowers will be able to qualify for larger loans while still taking advantage of the benefits of conforming loans, such as reduced down payment requirements and better loan terms. This could be particularly beneficial for borrowers in these states who need more funds to purchase or refinancing their home. The increased conforming loan limit could also help buyers in Oregon and Washington who have surpassed the conventional loan limits but still want to receive the benefits of conforming loans.
Overall, the increase in conforming loan limits in Oregon and Washington is a positive development for borrowers in those states. With this change, borrowers can now access larger loan amounts while still benefitting from reduced down payment requirements and better loan terms. This could make it easier for borrowers to buy or refinance their home with conforming loans.
This article was contributed on Jul 28, 2023