Great news for Silicon Valley home buyers. Just last week, the Federal Housing Finance Agency (FHFA) announced new Freddie Mac and Fannie Mae loan limits. This should help more Silicon Valley buyers with their loan options going forward.
Freddie Mac/Fannie Mae Loan Limits
As of October 2017, San Jose median sale prices for single-family homes hit over $1,000,000 for the first time ever. That means that the previous $636,150 max for a Freddie Mac or Fannie Mae loan fell far short of what was needed. To meet the continuing rise in home prices, the new max bumps up to $679,650, a 6.8% increase. While still well below the median sale price for Silicon Valley homes, the higher limit will definitely help many buyers with their home purchase.
The new $679,650 only relates to the first mortgage on a single-family home. Multiple units qualify for higher limits. Beginning in January, the FHFA backs loans for duplexes up to $870,225. For triplexes, the new limit is $1,051,875. Finally, four unit multi-family residential properties receive backing up to $1,307,175 throughout Santa Clara County when utilizing Freddie Mac or Fannie Mae loans.
All loans delivered to Freddie Mac or Fannie Mae before January 1, 2018, must conform to 2017 limits. However, anything delivered in 2018 is subject to the new limits. The limits apply only to the original mortgage loan amount no matter what the balance is once it's received at Freddie Mac or Fannie Mae. It is the lender's responsibility to check that the original amount doesn't exceed the limit.
Will FHA loans follow suit with the new conforming limits put out there by the FHFA? Currently, there's no word from their camp. However, I will let you know if and when we learn anything new.
The FHFA regulates both Freddie Mac and Fannie Mae. While still below the median sale price for a Silicon Valley home, the new limits give buyers more options for their home purchase. This also marks the second year in a row that limits have been raised due to increase housing prices. Be sure to visit my Home Buying page for even more buyer tips. When you're ready to start looking for a new Silicon Valley home, let me know. I'm here to help.