With the rise in prices and the competitive market, it’s always nice to provide buyers with good news. This is real news that will help their home buying process. In early December 2021, the FHFA announced that it is raising the loan limits for buyers purchasing homes in 2021. This is applicable to the conforming loan limit, which is where we need to get a little bit of explaining. A conforming loan is one that can be acquired by Fannie Mae and Freddie Mac. A non-conforming loan, such as a jumbo loan, exceeds this threshold. Lenders can’t sell non-conforming loans to Freddie Mac or Fannie Mae, so they are viewed as a bigger risk so they often come with higher interest rates (and sometimes other requirements too).
How does this impact buyers in Massachusetts? Well, many of our counties saw their conforming loan limit increase to $770,500. The list of counties this includes is Middlesex, Suffolk, Norfolk, Plymouth, and Essex. Dukes County had its loan limit set at $970,800. This allows more homes to qualify for the conforming loan products that come with lower interest rates and usually fewer requirements for reserves and more. SOLD for HOPE Summary Your ability to purchase a slightly higher-priced home has improved. With interest rates remaining low you can now look at homes that previously would have been considered jumbo loans. Many communities do exceed this loan limit with the average homes, but any news is good news for buyers as we navigate the market together!