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If you’re looking to buy a home, there’s no doubt that home prices have increased quite a bit recently. The good news is, recent loan limit changes should help increase your buying power.

FHA loan limit changes were recently announced. The Federal Housing Finance Agency has also increased conforming loan limits for Fannie Mae and Freddie Mac loans in 2018. Since the VA follows the policy of Fannie Mae and Freddie Mac, VA loan limits are increasing as well.

We’ll go over why these limits are important in your loan process. After that, we can take a look at the impact of the changes. I won’t bury the lead, though. If you plan on buying a home with a conventional or VA loan in 2018, limits have changed for the better.

Conforming Loan Limits

Conforming loan limits are important because anything above the conforming loan limit in a particular area means you’ll need a jumbo loan. Jumbo loans enable you to go beyond regular conforming limits. At Quicken Loans, the maximum limit for regular jumbo loans is $3 million. The VA has a separate jumbo limit of $1.5 million.

If you need it, jumbo loans give you increased flexibility, particularly in high-cost areas with particularly hot housing markets. However, they come with their drawbacks.

In order to qualify for a jumbo loan, you need a higher credit score and (depending on the loan type) a lower debt-to-income (DTI) ratio. You might also need to show that you can pay the full mortgage payment (including taxes, insurance and any applicable homeowners association dues) for a longer period of time in the event of a loss of income than you would on a conforming loan.

This isn’t intended to be a comprehensive list. If you have further questions about jumbo loan qualification requirements, one of our Home Loan Experts would be happy to speak with you.

2018 Loan Limits

In 2018, the baseline loan limit for a one-unit property for conventional and VA loans increased by $29,000 to $453,100, an increase of roughly 6.8%. In high-cost areas where the median home price is higher than the baseline loan limit, loan limits vary based on county.

The absolute upper loan limit in any county for a one-unit property is $679,650, which is up from $636,150 last year. This is also the limit across all of Alaska and Hawaii.

If your property has multiple units, the national limits are as follows:

  • Two-unit: $580,150 ($870,225 upper limit in high-cost areas)
  • Three-unit: $701,250 ($1,051,875 upper limit in high-cost areas)
  • Four-unit: $871,450 ($1,307,175 upper limit in high-cost areas)

Are you looking to buy a home soon? You can get preapproved online through Rocket Mortgage® by Quicken Loans. If you’d rather check out your options over the phone, one of our Home Loan Experts would be happy to talk to you at (800) 785-4788. You can leave any questions for us in the comments below.

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