FHFA increases conforming loan limit

LIHUE — Hawaii homebuyers will have more access to money for mortgages in 2019 now that the Federal Housing Finance Agency has increased the maximum conforming loan limits by 6.9 percent.

In most of the U.S., the 2019 maximum conforming loan limit for mortgages to be acquired by Fannie Mae and Freddie Mac for one-unit properties will be $484,350, an increase from $453,100 in 2018.

In Hawaii, though, the baseline loan limit will be increased to $726,525 thanks to laws that establish different loan limit calculations for Hawaii, Alaska, Guam and the U.S. Virgin Islands.

Kauai lender Doug Steiner with Homebridge Financial Services said the change will allow homeowners to take advantage of higher loan amounts without the higher interest rates or stricter underwriting guidelines.

“In the past, on most islands, we have had a conforming loan limit and a high balance loan limit. Guidelines for conforming and high balance varied some and rates were higher on the high-balance loans than the conventional,” Steiner said. “With this recent announcement there will now only be one conforming loan cap amount of $726,525 statewide for one-unit properties for Fannie Mae and Freddie Mac programs.”

Malama Kealoha, branch manager with Kauai Security National Mortgage Company, said the streamlined underrating approval on secondary loans sold to Fannie Mae and Freddie Mac makes it easier to qualify for loans up to that limit.

“Conforming loans can be bought and sold and they’re the bulk of the loans you’ll see happening,” Kealoha said. “Above that limit (baseline conforming loan limit), loans are more investor-specific, with more criteria.”

The baseline conforming loan limit for Fannie Mae and Freddie Mac is adjusted every year by law through the Housing and Economic Recovery Act to reflect the change in the average U.S. home price.

Median home values generally increased in high-cost areas in 2018, driving up the maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525 — or 150 percent of $484,350.

It’s a response to improved economic conditions and rising housing prices, Kealoha explained.

“For Kauai, if you look at the median sale price for homes, it’s quite close to that limit (baseline conforming loan limit),” Kealoha said. “So, over the last couple years, as you’re seeing it inch above that limit, that means less than half (of lending on Kauai) would be conforming loans.”

That means more criteria and a more-involved process for the average homebuyer seeking a loan. Raising the baseline loan limit allows access to more capital for secondary loans with fewer criteria to secure.

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Jessica Else, staff writer, can be reached at 245-0452 or jelse@thegardenisland.com.

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