2024 Conforming Loan Limits
If you're a Phoenix homebuyer eager to stay ahead in the real estate game, the latest conforming loan limit news is something you won't want to miss. Drumroll, please—$766,550 is the magic number for a single unit in 2024. But before you start crunching numbers and contemplating your dream home, let's dive into what this means and how it might shape your home-buying journey.
Understanding the Conforming Loan Limit: Beyond the Headline
So, does this mean you can't secure a mortgage for more than $766,550? Not at all. The conforming loan limit is essentially the maximum amount that Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs), can guarantee. While this guarantee offers perks in terms of loan approval and interest rates, it doesn't cap your mortgage possibilities. There are plenty of mortgage options available for higher amounts or those not backed by the GSEs. However, conforming loans still dominate the mortgage landscape, accounting for a significant majority of new mortgages.
$766,550 and Beyond: Unpacking the Numbers
The $766,550 figure is the base amount, but don't let that limit your aspirations. Higher-cost areas enjoy access to elevated limits determined by the average home prices in the region. Curious about the specific limits in your county? Check them out separately [HERE]. For those in the highest tier, the limit peaks at $1,149,825 (base loan limit multiplied by 1.5).
For all counties in Arizona, the limits are as follows: Single Unit: $766,550 | Two Unit: $981,500 | Three Unit: $1,186,350 | Four Unit: $1,474,400
As compared to our friends in San Diego County: Single: $1,006,250 | Duplex: $1,288,200 | Triplex: $1,557,150 | Fourplex: $1,935,150
Or our clients in Los Angeles County, considered a “high-cost area”: Single: $1,149,825 | Duplex: $1,472,250 | Triplex: $1,779,525 | Fourplex: $2,211,600
Behind the Scenes: How FHFA Shapes the Numbers
The Federal Housing Finance Agency (FHFA) is the regulator of the GSEs. This agency publishes a trove of home price data, with the crucial update coming in the third quarter (typically around late November). The process involves comparing the current quarter's data to the same period in the previous year, adjusting home prices accordingly.
It's worth noting that when home prices experience a dip, the conforming loan limit doesn't follow suit. Instead, it remains steady until home prices rebound above the levels associated with the previous limit. Picture this: If the limit was $700,000, but a downturn dropped it to $600,000, it stays fixed at $700,000 until prices recover.
Charting the Course: Positive Trends in Home Prices
Despite a slowdown in early 2023, the overall outlook remains positive. Year-over-year numbers, including the Case Shiller Home Price Index focusing on the 20 largest metro areas, are holding steady in positive territory. While the Case Shiller HPI isn't used for conforming loan limit calculations, it's another indicator of the resilience of the real estate market.
As you embark on your home-buying journey in Phoenix, armed with the knowledge of conforming loan limits and the factors influencing them, you're better equipped to make informed decisions. Stay tuned for more updates, and may your path to homeownership be smooth and rewarding in 2024!
-Alaina Gervais | alaina@horizon-funding.com | @livelaughloans
