Pub. 6 2018 Issue 4

16 The Community Banker www.mibonline.org CONFORMING & JUMBO LOAN LIMITS FOR 2018 By Dale Neiss, CRCM Consultant F annie Mae (FNMA) and Freddie Mac (FHLMC) are restricted to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.” Loan amounts above this limit are known as “jumbo loans.” Baseline limit The Housing and Economic Recovery Act (HERA) requires the baseline conforming loan limit be adjusted each year for FNMA and FMAC to reflect the change in the average U.S. home price. According to the Federal Housing Finance Agency (FHFA), house prices increased 6.8 percent, on average, between the third quarters of 2016 and 2017. Therefore, the baseline maximum conforming loan limit in 2018 will increase by the same percentage. In most of the U.S. – all but 71 coun- ties or county equivalents – the 2018 maximum conforming loan limit for one-unit properties will be $453,100, an increase from $424,100 in 2017. Any loan amount above the 2018 baseline limit of $453,100 will be a “jumbo loan.” Special statutory provisions establish different loan limit calcula- tions for Alaska, Hawaii, Guam, and the U.S. Virgin Islands. In these areas, the 2018 baseline loan limit will be $679,650 for one-unit prop- erties. However, loan limits may be higher in some specific locations. High-cost area limits For areas in which 115 percent of the local median home value exceeds the baseline conforming loan limit, the maximum loan limit is higher than the baseline loan limit. The HERA establishes the maximum loan limit in those areas as a multiple of the area median home value, while setting a “ceiling” on that limit of 150 percent of the baseline loan limit. Therefore, the new “ceiling” loan limit for one-unit properties in most high-cost areas will be $679,650 – 150 percent of $453,100. Similarly, any loan amount above the 2018 high-cost area limits will also be a “jumbo loan.” Additional resources Questions about the 2018 conforming loan limits can be addressed to LoanLimitQuestions@fhfa.gov . For a list of the 2018 maximum loan limits for all counties and county-equivalent areas in the U.S., click here: www.fhfa.gov/DataTools/Downloads/Pages/Conforming-Loan-Limits.aspx. For a map showing the 2018 maximum loan limits across the U.S., click here: www.fhfa.gov/DataTools/Tools/Pages/Conforming-Loan-Limits-Map.aspx.