The rising costs of homeownership and rates have become a constant, much to the frustration of many future homeowners. To help alleviate some of this, however, we have increased our conventional lending limit to give homebuyers a competitive edge they need in today’s complex real estate market.

Our conventional loan limit is now $715,000, up from $647,200. We’re getting ahead of the Federal Housing Finance Agency, which is expected to make the limit increase later this year.

This gives homebuyers access to tens of thousands of dollars of more buying power. This forward-thinking approach allows homebuyers and their real estate team to enter the field with the ability to make strong and attractive offers to offset competing buyers.

Most conventional lending programs have limits on how much someone can borrower, based on where they intend to purchase a home. Areas with higher costs of living will feature higher limits, for example.

Also known as conforming loan limits, buyers must stay under the lending threshold to take full advantage of the lending mechanism. Otherwise, homebuyers might have to turn to a jumbo loan, which has varying requirements. They typically have higher rates, stricter underwriting standards and require a larger down payment.

The baseline loan limit is the most a buyer can borrow assuming all their financial details are in good standing to manage a mortgage loan. For multiple housing units, the conventional loan limit will be higher. Unlike FHA loans, conventional loans are not backed by the federal government. In most cases, conventional loan limits are higher than FHA programs. Conventional loans are offered by private mortgage companies and are administered following rules set by Fannie Mae or Freddie Mac.

Conventional loans can be conforming or non-conforming, which means it’s a private-sector-backed mortgage. Conforming loans are handled by Fannie Mae or Freddie Mac. These entities are known as government-sponsored enterprises. They are setup to open access to credit opportunities to increase homeownership for the greater public good.

While not technically guaranteed by the federal government, these loans necessitate loan limits. This protects the government in the event of any extended lending losses.

If you have any questions, don’t hesitate to contact us today!