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What will mortgage loan limits look like in 2015?

loan limitsEvery year the Federal Home Finance Agency (FHFA) sets loan limits for conforming (government-backed) loans. What will mortgage loan limits look like in 2015? Well, to begin, the FHFA has decided that conventional loan limits will remain unchanged, at $417,000, in 2015. This decision won’t necessarily excite homebuyers, but the important thing is that it won’t cause a decrease in homeownership.

The conventional loan limit has not been changed since 2006. Even during the recession, the limit was kept at the current figure with the hopes of spurring home purchases.

 

What’s a loan limit?

A loan limit is exactly what it sounds like: the maximum loan size for a mortgage. This number will vary between products and region. The conventional loan limit (the one decided by the FHFA) is different from other mortgage products. The FHA loan, VA loan, USDA loan, and jumbo loans all have different loan limits.

 

Jumbo loans

Jumbo loans are different from all aforementioned loans because the government does often not back them. The rates for these loans vary; they are sometimes higher than conforming loans and sometimes lower. All jumbo loans will have stricter loan standards than most other loans because they are privately funded and carry more risk.

 

Not all loan limits are created equally

Loan limits are raised in areas where home values are much higher than the U.S. average. Without this allowance, most metropolitan homeowners would have to take out private jumbo loans. In California, the following counties will have higher loan limits in 2015:

  • Monterey County, California Loan Limit 2015: $502,550 (2014: $483,000)
  • Napa County, California Loan Limit 2015: $615,250 (2014: $592,250)
  • San Diego County, California Loan Limit 2015: $562,350 (2014: $546,250)
  • Ventura County, California Loan Limit 2015: $603,750 (2014: $598,000)
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