2021 Conventional loan size update

[Zach Wain]

Hello All,

Each year the Federal Housing Finance Agency reassesses the conventional loan size and high balance/super conforming loan size limits. After some speculation, the analysts were pretty accurate. Most predicted a $545,000-$550,000 national loan size limit. For 2021, the official conventional loan size limit was announced at $548,250. For some high cost counties like Los Angeles County, the super conforming loan size limit for 2021 is $822,375.

This will also impact VA borrowers as well. VA loans are allowed to go above the national loan size limits, but the interest rates are higher once you cross that threshold. That will allow our Active Military and Veterans to get access to better interest rates at slightly larger loan sizes.

What does this mean for real estate?  In my opinion, the more access borrowers have to cheap money (conventional loans) the better it is for areas like Phoenix, Denver, San Diego, etc.  Places where sales prices have been creeping higher and higher and buyers of primary homes have to struggle with putting more than 20% down to stay at a conventional loan size or deal with high rate and difficult to acquire second mortgages.  This will boost affordability in many areas and help real estate values.  There are supply/demand concerns all over the nation and that is another topic, but this is a positive move for many areas and markets.

Cheers,

Zach Wain 

Broker

Wain Capital LLC