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December 2015

Loan limits increased in 3 high-cost areas around Puget Sound

Federal Housing Finance AgencyLoan limits will rise in 39 high-cost counties around the country in 2016, including three counties in Western Washington: King, Pierce and Snohomish.

Starting January 1, the loan limits in the tri-county Puget Sound area will rise from $517,500 to $540,500, an increase of $23,000. Elsewhere, which includes most of the country, the Fannie Mae and Freddie Mac loan limit for 2016 will remain at $417,000 for one-unit properties.

Loan officer Jeff Tisdale with Primary Residential Mortgage, Inc. noted VA mirrors Fannie and Freddie so the VA limit will rise as well. "This means a veteran could get a zero down loan with no PMI up to $540,500," he remarked.

According to a statement from the Federal Housing Finance Agency (FHFA), the Housing and Economic Recovery Act (HERA) of 2008 established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise again until home prices return to pre-decline levels.

The FHFA said the $417,000 limit will remain unchanged for 2016 in most areas because it determined the average U.S. home value in the third quarter of this year remained below its level in the third quarter of 2007.

Among other areas where the limits will be lifted are several counties in the Denver metro area, the Boston metro area, the Nashville metro area and four counties in California. In Napa County, California, which encompasses Napa, the conforming loan limit will increase from $615,250 to $625,500.

A chart of loan limits for each county may be downloaded from FHFA as either a spreadsheet or PDF.  As in the past, the HERA maximum conforming loan limit for two-, three-, and four-unit properties are simply multiples of the one-unit limits. The downloadable HERA maximum loan limits file shows the 2016 maximum conforming loan limits for two-, three-, and four-unit properties.