Conforming loan limits increase January 1, 2018 – King County now $667,000
The Federal Housing Finance Agency (FHFA) announced it will raise its conforming loan limit on Jan. 1, 2018. Mortgage financing giants Fannie Mae and Freddie Mac will allow maximum conforming loan limits for mortgages in most parts of the U.S. to be $453,100.
In the higher cost counties of King, Pierce and Snohomish, the loan limit will rise to $667,000. View all U.S. loan limits.
“This loan limit increase means the down payment needed for our average-priced homes is significantly more affordable for the majority of our home buyers,” said 2018 Seattle King County REALTORS® President Shane Davies. “Accumulating enough money to make a 20% down payment ($120,000 on a $600,000 home) is a tremendous hurdle for much of our population. It is especially difficult if the Buyer has not built any equity in a previously owned home. These new higher loan limits allow home buyers to make more reachable down payments of 3% to 5% on purchases more in line with our current home prices in the Puget Sound area.”
For 10 years, the FHFA had set the conforming loan limit in most places at $417,000. But as home prices started rising, the FHFA bumped up the conforming loan limit in 2017 to $424,100. As prices continued to increase this year, the FHFA has raised limits again for 2018.
Fannie Mae and Freddie Mac are restricted by law to purchasing single-family mortgages with origination balances below a specific amount, known as the “conforming loan limit.”
The Housing and Economic Recovery Act (HERA) requires yearly adjustments to the conforming loan limit of the government-sponsored entities to reflect changes in the average U.S. home price. Average home values have risen by 6.8 percent since the third quarter of 2016, according to the FHFA’s latest House Price Index (HPI). So, the maximum conforming loan limit will now rise by 6.8 percent also.