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United Wholesale Mortgage and Guaranteed Rate are the latest lenders to say they’ll price mortgages of up to $750,000 as if they meet Fannie Mae and Freddie Mac’s conforming loan limits in advance of an expected increase in the limits next year.
Rocket Mortgage was the first lender to get a jump on Fannie and Freddie’s federal regulator, the Federal Housing Finance Agency (FHFA), which next month is expected to announce an increase in the 2024 conforming loan limit from the 2023 baseline of $726,200 for one-unit properties in most of the country.
Rocket announced on Oct. 2 that the company’s wholesale channel, Rocket Pro TPO, would treat loans of up to $750,000 for one-unit properties in the lower 48 states as conforming, and up to $1.125 million in Alaska and Hawaii.
That assumes that the FHFA’s seasonally adjusted, expanded-data House Price Index will show home prices posted annual gains of at least 3.3 percent when it’s released on Nov. 28.
“We’re very comfortable with that $750,000 number,” Rocket Pro TPO EVP Mike Fawaz told Inman at the time. Rocket will hold the loans that exceed the current conforming loan limit until the new loan limit goes into effect on Jan. 1, he said.
The head start on the increase is welcome news for borrowers who would otherwise need to take out a jumbo mortgage too big for purchase by Fannie and Freddie. Jumbo mortgages tend to have stricter underwriting and higher down payment requirements, and lately, many borrowers have also had to pay higher rates for jumbo mortgages than they would if they were taking out a conforming loan.
For homebuyers making a 10 percent down payment, a $750,000 loan would enable them to buy a home priced at up to about $830,000 if they didn’t need to finance their closing costs.
After Rocket dipped its toe in the water, Guaranteed Rate followed suit, announcing an “Expanded Loan Amount Conforming Program,” on Oct. 9.
“There are some rules on who can get this loan and what type of home it can be used for,” Guaranteed Rate’s announcement said. “You must be purchasing a one-unit residence that you will use as your primary residence. And you must meet the minimum credit requirements.”
UWM announced higher expected limits for conventional and VA loans Wednesday, with loans of up to $750,000 for one-unit properties treated as conforming. A UWM spokesperson told Inman updated conforming loan limits are also available on one-unit VA mortgages and conventional loans for dwellings with up to four units.
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