If you had your eye on a home or neighborhood within a certain price point but weren’t able to borrow enough for a loan, your luck could change in 2024. Last week, the Federal Housing Finance Agency and the Federal Housing Administration announced increases in how many buyers can borrow to obtain federally backed loans, as part of their annual needs to keep pace with changing housing prices real estate.
For FHFA loans, the limit will increase to $766,550, a jump of $40,350 from the 2023 threshold of $726,200. In areas with a higher cost of living, such as California, New York and Hawaii, the limit is set at 150% of the base limit, which equates to $1,149,825.
Ken Fears, director of conventional housing finance and appraisal policy at the National Association of REALTORS, said, “NAR is encouraged by FHFA’s continued efforts to provide liquidity in all markets. Homebuyers in high-cost markets are not immune to the affordability challenges presented by rising mortgage rates over the past year. Allowing Fannie Mae and Freddie Mac to support the broader market provides affordable and much-needed financing to those who do not qualify for purely private options.
For FHA loans, which often attract buyers with smaller down payments or lower credit scores, the limit will increase to $498,257, up from $472,030 this year. FHA loans often require only a minimum 3% down payment but come with private mortgage insurance required as part of the loan.
“The higher loan limits will help more people, especially those living in high-cost areas, be able to purchase a new home. especially now when rates are still high, but falling. Conforming loans allow for lower credit scores, debt-to-income ratios up to 50%, lower down payments, renovation loans and much more,” said Melissa Cohn, regional vice president of William Raveis Mortgage .
Home prices have been rising steadily, with median home prices this fall increasing between 3.4% and 3.5% over last year, according to NAR and Redfin data. Rising mortgage interest rates have dampened price growth, but demand remains high, meaning any potential decline in median prices over the coming year will likely be minimal and limited to less competitive markets.
To see a full map of where different loan limits apply, go to this site by the FHFA.