Bump in 2018 Conforming Loan Limits Likely to Save Borrowers Thousands

• Nationwide, the 2018 conforming loan limit for most counties increased by $29,000 (6.8 percent), to $453,100.

Tens of thousands of homes in some of the nation’s priciest housing markets – including New York, L.A., Miami and Seattle – will no longer require a jumbo purchase mortgage next year, likely saving their potential buyers thousands of dollars.

The Federal Housing Finance Agency (FHFA) recently bumped 2018 conforming loan limits – the maximum loan amount that federally backed mortgage insurers Fannie Mae and Freddie Mac will guarantee. Loans above these limits – known as jumbo mortgages – must be insured by private mortgage insurers, and typically cost more.

Nationwide, the 2018 conforming loan limit for most counties increased by $29,000 (6.8 percent), to $453,100. The increase is roughly in line with current annual U.S. home value appreciation as measured by the Zillow Home Value Index, which stood at 6.5 percent as of October (the most recent month for which data is available).[1]

In 138 FHFA-designated “high-cost counties” nationwide, the conforming loan limit is higher than the national baseline. Three Washington state counties in the Seattle area – King, Pierce and Snohomish counties – got the biggest increases in the local conforming loan limit, bumped by $74,750 from 2017 levels to $667,000 in 2018. California’s Sonoma County and Boulder County in Colorado also received large bumps in the local conforming loan limit of around $50,000. Hood River County in Oregon – just east of Portland – was designated as a “high-cost county” for the first time.

About 25.1 million homes nationwide are worth enough currently to require a jumbo loan.[2] Under the 2018 conforming loan limits, about 2.8 million U.S. homes will fall back under the conforming loan limit. The metros with the largest increases of homes that fall below the 2018 conforming loan limit will be: New York (206,000), Los Angeles (148,700), Chicago (102,800), Miami (94,400) and Seattle (91,300).

[1] The Federal Housing Finance Agency adjusts its loan limits based on changes to its own seasonally adjusted, expanded data House Price Index, which includes estimates for the increase in the average U.S. home value over the last four quarters.

[2] Assuming a loan-to-value ratio of 0.75, which is typical for jumbo mortgages.