$726,200 is the number for 2023 if you’re here for the matching loan limit news.
Does this mean no one can take out a mortgage over $726,200? The Eligible Loan Limit is the maximum amount that Fannie Mae and Freddie Mac (Government Sponsored Enterprises or GSEs) can guarantee. The guarantee has advantages in terms of the loan approval process, degree of interestThere are plenty of higher priced and non-GSE-insured mortgage options, but the vast majority of new mortgages are matching loans.
$726,200 is the base amount. Higher cost areas have access to higher limits based on the average home price in that area. Restrictions by county are listed separately. hereThe highest tier is $1,089,300 (base loan limit x 1.5).
Where do these numbers come from?
The Federal Housing Finance Agency (FHFA) is the GSE regulator. We publish various housing price data. When data for the third quarter (usually through late November) is entered, it is compared to the third quarter of the previous year and house prices are adjusted by the corresponding amount.
If house prices fall, the limit will not be lowered, but will not rise again until house prices exceed the level associated with the previous limit. For example, let’s say the loan limit was $700,000 for him, but the price dropped to $600,000 for him. The limit remains at $700,000 each year (even if prices are rising) until the price rises above $700,000.
That said, it’s clear that they’re not currently addressing the year-over-year decline in home prices. July and his FHFA price index in August fell slightly on a monthly basis, but rebounded in September. The Case-Shiller Price Index, which usually looks a lot like the FHFA in terms of month-to-month behavior, continued its decline in September.
On an annual basis, both are still in positive territory.
The blue line in the chart above is from the FHFA’s Monthly House Price Index. Matching loan limits are based on an extended quarterly index that fluctuates slightly. Interestingly, the monthly data showed a 1.2% decrease during the third quarter, while the quarterly data showed a 0.2% increase. Note: This is the increase from the end of Q2 to the end of Q3. Comparing Q3 2022 and Q3 2021, the profit is 12.2% (which is why the new credit line for 2023 is 12.2% higher).
Need more details?
The final index value for the quarterly data for the third quarter was 369.50 compared to last year’s third quarter value of 329.3. Loan limits increase the percentage change between these two numbers.
369.5 divided by 329.3 = 1.122077133
2022 Loan Limit 647,200 x 1.122077133 = $726,208.32, rounded to the nearest $50 = $726,200.
This limit will take effect for loans acquired by GSEs in 2023. This usually means that it takes at least a month for a new loan to be “offered” to his GSE, so the lender can immediately apply the restrictions. Lenders tend to adopt new limits at a slightly different pace. The frontrunners are likely to announce them today.
What about FHA loan limits? These have not yet been announced. Last year it happened on the same day as FHFA. Either way, the calculation is known. The FHA will be 65% of the FHFA Eligible Loan Limit or $472,030.