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Summary: Conforming loan limits in Denver have increased for 2020 as a result of higher home prices. In this article, we’ll discuss what these numbers are and how that will affect the homebuying process.
Over the past year, home prices in the Denver metro area have increased quite a bit. As such, conforming loan limits will be increased for 2020, according to federal housing officials.
For all cities within Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties, the 2020 conforming loan limit will increase to $575,000 in 2020 for single-family properties. There are higher limits for multi-family properties, as noted in the chart below.
Denver Conforming Loan Limits Will Rise For 2020
Two government-sponsored enterprises (GSEs) purchase loans from mortgage lenders: Fannie Mae and Freddie Mac.
Conforming loans are those that meet the size requirements used by Freddie Mac and Fannie Mae. If these size requirements are exceeded, the loans are considered to be “jumbo loans.”
Borrowers who need to take out a jumbo loan will likely have to meet stricter loan requirements because of the higher loan amount borrowed.
In 2020, conforming loan limits – which is the threshold between conforming and jumbo loans – in Denver will rise thanks to an increase in home values. For the Denver metro area, the conforming loan limit for a single-family property in 2020 a will go up to $575,000, from 2019’s loan limit of $561,200. That’s an increase of $13,800 from the 2019 loan limit.
These caps are generally consistent across all metro areas. In the case of the Denver metro area, Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties all have the same conforming loan limits.
Beyond the Denver metro area, the 2020 loan limit for the majority of other counties across the state of Denver will go up to $575,000 next year.
Please note: Qualified borrowers with sufficient income are typically eligible to borrow more than the conforming loan limit for their county. This would be considered a “jumbo” mortgage scenario.
Higher Home Prices = Higher Mortgage Amounts
The increase in Denver’s 2020 conforming loan limits comes as a result of an increase in property values in 2019. Federal housing officials review these loan limits every year relative to property values. If the increases in home prices are substantial within a calendar year, federal housing officials will respond appropriately by increasing loan limits. This is what happened over the course of 2019.
Having said that, Denver isn’t the only center that will see an increase in conforming loan limits in 2020. In fact, the majority of counties across the US will be boosted next year as a result of rising home values.
According to a recent press release from the Federal Housing Finance Agency (FHFA):
“…the maximum conforming loan limits for mortgages to be acquired by Fannie Mae and Freddie Mac in 2019. In most of the U.S., the 2020 maximum conforming loan limit for one-unit properties will be $510,400, an increase from $484,350 in 2019.”
The median home value in Denver is now 426,200, according to Zillow. And even though prices in the area have leveled off somewhat, they are still higher than they were last year. In turn, loan limits in Denver will be increased for 2020.
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