Hey, Kyle here with WinTheHouseYouLove.com.
Conventional Loans now have new loan limits for 2023 or
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%.
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 is, this is unofficial.
I'll explain this here in a minute, but, FHFA has not actually
released their loan limits yet.
But lenders have increased them artificially, which I will
explain here in a future slide.
So this here is the maximum loan you can get right now on a conventional loan
for a one unit primary residence, okay?
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.
And I'll show you on an upcoming slide.
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.
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.
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 a extra 113.
So just a little bit over $737.
Now, something interesting to note though 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 that you might have to put 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, okay?
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.
Okay.
And so what lenders have done recently is they're trying to kind of, you know,
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 without 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.
Okay.
And I wanna show you really quickly, the Home Price Index here.
So this is the FHFA Home Price Index or 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 a first bit of change here in actually a decline in home
prices since this incredible like 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.
Okay.
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 is 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.
Okay?
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.
So there are four main lenders right now who are doing this change.
Again, cuz this is not an official 2023 Loan Limits released by FHFA.
There are four lenders who have said, We're going to do this in
anticipation for this change.
That's a 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.
So I wanna show you also the loan limit map here.
This is for 2020.
But this is gonna show you those high cost of living areas.
So everything here in the gray is that standard limit, which
likely next year will be $715,000.
Okay?
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.
So right here in the orange and the yellow, these 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 that went up to 694,600 in an area like San Benito County.
That's $970,800.
Okay.
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
go to win the house you love.com/.
Lender from here, all you have to do is pick what state you're
looking in, either Ohio, Kentucky, Florida, or all other states.
And 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 call if you have questions, and you wanna work through
those before you start on an application.
Okay, Now loan limits are just a little piece of the puzzle.
To learn more about conventional loans, click on this video over here where I
walk through all of the loan requirements.