Article Courtesy of: Banker & Tradesman
By Diane McLaughlin | Banker & Tradesman Staff
The maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac will increase by 12 percent nationally in 2023 and the limit for Greater Boston (Essex, Middlesex, Norfolk, Plymouth, & Suffolk counties) will increase by more than $100,000 to a limit of $828,000.
The Federal Housing Finance Agency said in a statement
today that the loan limit for one-unit properties will increase from $647,200 in 2022 to $726,200 in 2023. The FHFA adjusts the conforming loan limit annually to reflect the change in the average U.S. home price, as required by the Housing and Economic Recovery Act (HERA).
Because of median home values, several counties in Eastern Massachusetts will have higher limits for one-unit properties.
• Essex, Middlesex, Norfolk, Plymouth and Suffolk counties: $828,000
• Dukes and Nantucket counties: $1,089,300
The seven other Massachusetts counties will be subject to the $726,200 limit.
Almost every U.S. county will see an increase in conforming loan limits in 2023 because of rising home values, the FHFA said.
The baseline maximum conforming loan limit in 2023 increased by the same percentage as the FHFA’s estimated housing price increase. Using its third quarter 2022 House Price Index report, the FHFA calculated the increase based on estimates of the average U.S. home value over the last four quarters. According to FHFA’s seasonally adjusted data, house prices increased 12.21 percent between the third quarters of 2021 and 2022.
Greater Boston and the Islands will have higher maximum limits because 115 percent of the local median home value exceeds the baseline limit.
Both Dukes and Nantucket counties will qualify for the maximum limit of $1,089,300 on one-unit properties, up from $970,800 in 2022. HERA limits the maximum conforming loan ceiling to 150 percent of the baseline.
The 2023 conforming loan limit of $828,00 in Essex, Middlesex, Norfolk, Plymouth and Suffolk counties is up from $770,500 in 2022.
Conforming mortgages financed by government-sponsored entities and the FHFA are the most lenient, allowing eligible first-time homebuyers to put down as little as 3 to 5 percent in some cases. Jumbo loans, on the other hand, require borrowers to have higher FICO scores and larger down payments, and also come with asset and reserve requirements.