Mortgages & Creative Financing

5 Ways to Leverage New Federal Lending Limits to Build Your Real Estate Empire in 2020

Expertise: Mortgages & Creative Financing, Real Estate Investing Basics
40 Articles Written

This year, many investors were giving thanks earlier than the designated holiday, when the Federal Housing Finance Agency raised the maximum conforming loan limit for the fourth straight year on November 26th.

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So, what does this mean for you as an investor?

Well, if you are looking to get into your first rental property through a house hack or live-in flip using Fannie Mae or Freddie Mac products, you are in luck. You will soon be able to take out a federally backed mortgage up to $510,400 nationwide (and possibly higher if your purchase is in one of these 43 counties!).

Why the New Federal Lending Limit?

This is the fourth consecutive year the loan limits have risen. Why is that?

Related: Investment Property Loans: The Ultimate Guide to Funding Your Deals

By federal law, the loan limits must be adjusted as housing prices rise. From Q3 2018 to Q3 2019, home prices rose 5.38 percent; therefore, the loan limits had to rise by the same percentage.

Not everyone likes this.

Some market observers argue the larger loan limits are actually pushing up home prices for consumers. With home price growth slowing this year in many markets, this is actually creating more of an affordability crisis in many housing markets.

Additionally, this lending could balloon the government’s mortgage obligation. This, too, is causing a little unease.

But savvy investors know how to spot and leverage opportunity…

How Can You Take Advantage of This New Loan Limit?

Recently, I wrote about how to build a real estate empire using the FHA loan to purchase an investment property. This recent lending development—coupled with historically low interest rates—will allow you to access an additional $27,460 in lending capital for as little as $961 (3.5 percent) in a down payment at rock bottom rates (yes, please!).

Also worthwhile to note: this may open up access to lending opportunities for properties that just a few days ago couldn’t qualify for FHA lending. It’s time to rerun your lead searches.

Related: FHA Guidelines: How to Qualify for a 3.5% Down Loan

So, here’s how best to put this capital to use:

  • Purchase a live-in flip
  • Purchase a primary home that you will rent out after 2 years
  • Purchase a primary home that you will house hack and then move out after 2 years

Now, you are building an empire, so let’s supercharge your strategies a little here and really take advantage of these lending dollars to:

  • Purchase a 2- to 4-unit multifamily to house hack, then move out after 2 years and repeat
  • Purchase a 2- to 4-unit multifamily to rehab as you live there, house hack, then move out after 2 years and repeat

The house hack may not be for everyone, but let's not miss out on the fact that house hacking is not only a great way to reduce or eliminate your housing bill (for most Americans their largest ongoing expense), but it's also an amazing savings strategy to help you scale your portfolio quickly.


Fannie Mae and Freddie Mac lending remain amazing tools to help any investor launch and scale their real estate empires for low money down. And everyone needs a roof over their head, so this strategy is technically accessible to all who can qualify for the loan.

As a savvy investor, how will you leverage this early holiday gift in 2020?

Comment below!

Whitney is a real estate investor and personal finance trainer whose vision is to launch 10,000 families on the path toward financial independence. After purchasing her first rental in 2002, and hi...
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    Kathy Kathman from Tacoma, Washington
    Replied 10 months ago
    I just went through being rejected twice by fannie mae because my new house wasn't 100 miles away from my old house, which I turned into a rental. Both lenders were told "we do not want to be used as an investment tool" - This included the fact my original home (owned for 10 years), on a conventional loan 18 months would be the rental. Because I was buying another home using FHA, they considered that allowing me to use FHA as an investment tool in order to keep my 1st home as a rental. This does not appear to work as well as it seems.
    Whitney Hutten Rental Property Investor from Boulder, CO
    Replied 9 months ago
    Hi Kathy, Interesting... ask your lender "how you can get another FHA loan?" Keep asking until you find someone who will tell you what the issues are or who will work with you. I wonder if it's because you are doing the reverse... going from a conventional loan then trying to get an FHA loan. I could see that being the red flag. I did three FHA loans back to back and people write books on this strategy, so it does work... I'm wondering if there isn't something else going on here that could the actual obstacle.