VA LOAN LIMITS ELIMINATED – 2020
When “VA loans” first surfaced in 1944, the average cost of a house was only $8,600, making “loan limits” a nonconcern for the most part.
As home prices rose, however, loan limits or maximum loan amounts were put in place just like they were for FHA and Conforming loans.
VA loan limits will be eliminated in 2020, however, according to this Realtor.com article.
This means that the VA will ostensibly insure loan amounts of any size for veterans, as long as the individual lender is willing to take the risk of higher loan amount too (the VA does not insure the entire loan).
FHA LOAN LIMITS GOING WAY UP – 2020
FHA loan limits are increasing significantly in 2020 as well.
The FHA “High Balance” or “High-Cost Area” single-family residence loan limit is increasing from $726,525 to $765,600. This covers most of the Bay Area and California.
For the five counties in the Austin, Texas area, the single-family FHA loan limit is increasing from $389,850 to $404,800.
For the Dallas, Texas area, the single-family FHA loan is increasing from $395,600 to $404,800.
CONFORMING LOAN LIMITS WAY UP – 2020
CALIFORNIA/BAY AREA – The “high cost” or “high balance” conforming loan limit (for loans that “conform” to Fannie/Freddie guides) is increasing from $726,525 to $765,600.
TEXAS – The “low cost” or “low balance” loan limit that encompasses all of Texas and much of inland California is increasing from $484,350 to $510,400.
WHY LOAN LIMITS MATTER
Loan limits matter because FHA, Conforming and VA loans all have much more flexible underwriting and down payment guidelines than jumbo loans do.
It is extremely important for buyers and agents alike to be aware of every county’s loan limits.
This is especially important in California where loan limits drop significantly as buyers move inland from the coasts.
For example, a 3.5% down FHA buyer can qualify for a $765,525 loan near San Francisco, but that limit drops to only $506,000 in nearby Solano County.
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