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Homebuyers taking out mortgages of up to $802,650 with some of the nation’s biggest lenders are no longer being subjected to the more stringent underwriting standards and higher rates that typically apply to jumbo mortgages.
CrossCountry Mortgage, which sponsors more than 4,000 loan originators working out of 709 branch locations nationwide, on Tuesday became the latest lender to announce that it had raised its conforming loan limit ahead of an official announcement by Fannie Mae and Freddie Mac’s federal regulator.
Rocket Mortgage’s wholesale division, Rocket TPO, on Sept. 13 was the first to get a jump on an official announcement, prompting rivals Pennymac, United Wholesale Mortgage and Rate to follow suit.
CrossCountry Mortgage (CCM) launched an “Early Bird” product Monday, which matches the higher conventional loan limits for single-family mortgages set by Rocket, Pennymac and UWM.
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Jenn Stracensky
“CCM understands the challenges faced by homebuyers in the current market and is committed to providing innovative solutions to meet their needs,” CCM Chief Operating Officer Jenn Stracensky said in a statement. “The Early Bird Program is our way of helping borrowers seize opportunities and navigate their path to homeownership.”
Although Rate had informed Inman on Sept. 17 that it would raise its conforming loan limit to $802,650 on Sept. 24, the lender issued a press release Tuesday saying that in most states, it will continue to treat loans bigger than $792,000 as jumbo mortgages.
As far as Fannie and Freddie are concerned, the 2024 conforming loan limit for single-family homes remains $766,550 in most parts of the country. However, the limit, which is tied to home prices, is expected to go up on Jan. 1 — expanding the pool of loans eligible for purchase and guarantee by the mortgage giants.
An official announcement by Fannie and Freddie’s federal regulator, the Federal Housing Finance Agency (FHFA), is expected in November. Lenders who are willing to make an educated guess as to what the 2025 conforming loan limit will be can wait until the New Year to sell loans that exceed the current limit to Fannie and Freddie.
Baseline conforming loan limit, 2000-2024
Source: Federal Housing Finance Agency.
As home prices soared during the pandemic, the conforming loan limit went up by a record 18 percent in 2022 and by 12.4 percent in 2023. This year’s 5.5 percent increase was more in line with historic trends.
U.S. home prices rose 4.5 percent during the year ending July 31, FHFA reported Tuesday, and Fannie Mae forecasters predict home price appreciation will slow to an annual rate of 3 percent by the end of next year. However, inventory shortages in many markets have continued to drive up home prices this year.
In their most recent forecast, Fannie Mae economists predicted that home prices would appreciate at an annual rate of 6.3 percent during Q3 2024 and 6.1 percent in Q4. That forecast was made in July and will be updated in October.
FHFA will use actual Q3 2024 annual home price appreciation to adjust the loan limit, so the assumption by Rocket and other big lenders that the 2025 conforming loan limit will go up by 5.3 percent looks like a safe bet.
Rocket Mortgage’s new conforming loan limits
The 2024 baseline conforming limits for multi-unit properties for 2024 are $981,500 for two-unit homes, $1,186,350 for three-unit homes, and $1,474,400 for four-unit properties.
In higher-cost markets like Alaska and Hawaii, Fannie and Freddie are allowed to purchase bigger mortgages based on a multiple of the median home value, up to a ceiling that’s equal to 150 percent of the baseline conforming loan limit.
Rocket is currently treating loans of up to $1,027,750 on two-unit homes in the lower 48 states as conforming, and loans of up to $1,543,900 million on four-unit properties. In higher-cost markets, Rocket will treat loans of up to $2,315,850 on four-unit properties as conforming.
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