Many consumers have recently faced higher rates or have been forced to put down larger downpayments due to a change to the way loans are classified.
The maximum size of a loan that can be financed by the FHA was reduced forcing some borrowers to make larger downpayments.
The minimum size for jumbo loans (i.e., loans not eligible for FHA, Fannie Mae, or Freddie Mac financing) may also have been lowered, forcing many prospective buyers to increase their downpayments and/or pay higher mortgage rates.
Nearly 50% of all respondents with a buyer-client indicated that their buyer-client was negatively impacted by the change to the FHA and GSE loan limits.
In addition, respondents noted that as a result of the change, buyers switched to USDA or VA financing, borrowed money from relatives, asked the seller to make concessions, or rushed to buy ahead of the deadline.
To read the complete new “Impact of New Conforming Loan Limits” survey, click here >
Ken Fears is the Manager of Regional Economics and Housing Finance Policy. He focuses on regional and local market trends found in the Local Market Reports and the Market Watch Reports . He also writes on developments in the mortgage industry and foreclosures.