As a result of the limit adjustment, home buyers will no longer need a jumbo purchase mortgage for tens of thousands of homes in some of the most expensive housing markets in the US such as New York, Los Angeles, Miami, and Seattle.
About 25.1 million homes across the US currently have values that would require a jumbo loan for a purchase. Approximately 2.8 million of these homes will no longer require such loans, as they will fall under the 2018 conforming loan limits.
New York will have the biggest increase of homes that fall below the new conforming loan limits at 206,000 homes. Other metros with large gains are Los Angeles with 148,700 homes, Chicago with 102,800 homes, Miami with 94,400 homes, and Seattle with 91,300 homes.
The FHFA recently raised conforming loan limits for 2018, with most counties seeing limits increase by 6.8% to $453,100. Loans that exceed these limits are known as jumbo mortgages. They are required to be insured by private mortgage insurers and are usually more expensive.
Zillow said the limit increase is roughly in line with the current annual US home-value appreciation as measured by the Zillow Home Value Index, which was at 6.5% as of October.
FHA announces 2018 limits, scraps insurance for PACE homes
FHFA hikes loan limits for 2018 in most of US
Higher conforming loan limits announced by the Federal Housing Finance Agency (FHFA) for 2018 will likely help potential home buyers thousands of dollars, according to Zillow Senior Economist Aaron Terrazas.