On November 28, the Federal Housing Finance Agency (FHFA) announced that it would be increasing conforming loan limits for most counties across the country in 2018. As a result, the jumbo loan threshold Washington State will increase as well.
In most Washington counties, the conforming loan limit in 2018 will be $453,100. Anything above that would be considered a jumbo mortgage loan. Higher limits apply to the Seattle area, due to the higher home prices there. In those areas, the conforming cap will go up to $667,000 in 2018.
What Is a Jumbo Loan Exactly?
Depending on their size, conventional mortgage loans (those that are not insured by the government) can either be conforming or jumbo.
- If a home loan meets the size requirements established by FHFA, and can therefore be sold to Freddie Mac and Fannie Mae, it’s referred to as a conforming loan.
- If it exceeds those size limits, it is considered a jumbo mortgage.
So a Washington State jumbo loan is essentially a non-conforming mortgage loan that is too big to be sold to (and backed by) Freddie Mac or Fannie Mae. Due to the higher amount being borrowed, jumbo mortgage loans in Washington can have stricter qualification criteria, compared to their smaller conforming counterparts.
Washington State Will Get Higher Limits in 2018
As mentioned above, the conforming loan limit for most counties across Washington State was increased to $453,100 for 2018. That’s a significant increase over the 2017 limit of $424,100. So in most counties of Washington, a jumbo loan is anything larger than $453,100.
San Juan County is the only county in Washington where the conforming loan limit for 2017 will be carried over to 2018, unchanged. The maximum conforming mortgage size for San Juan County will remain at $483,000 for 2018.
Seattle Area Is a Different Story
The Seattle metro area has higher limits because it’s a more expensive real estate market. For King, Pierce and Snohomish counties, the 2018 conforming loan limit for a single-family property is $667,000. That’s just slightly below the maximum or “ceiling” limit for high-cost areas in the U.S. So within these Seattle-area counties, a jumbo loan is anything above $667,000.
So how does this figure compare to home prices? Depending on the source, the median home price in Seattle now lies somewhere between $650,000 and $700,000. And it’s still rising. The median is the midpoint for the real estate market. So this means that roughly half of the homes in the Seattle area are priced above the new conforming loan limit for 2018.
This is a fairly new development. Seattle wasn’t always this expensive. Home prices in the area rose by double digits each year for the last couple of years. So they’re significantly higher today than they were just a few years ago. Seattle has become one of the more expensive real estate markets in the country, which is why it now has higher conforming limits and jumbo loan thresholds.
Given the rise in home prices in the area, it would not be surprising to see a higher number of Seattle home buyers using jumbo loans in 2018.
VA Mortgages Have the Same Caps as Conforming
It’s worth noting that the limits mentioned above also apply to VA home loans. For the last couple of years, the Department of Veterans Affairs has aligned its loan limits with those established by the Federal Housing Finance Agency. In other words, VA and conventional conforming loan limits have been the same for the last couple of years.
This will be the case in 2018 as well. Just recently, the Dept. of Veterans Affairs updated its website with the following message:
“VA’s 2018 Loan Limits are the same as the Federal Housing Finance Agency’s limits … Effective January 1, 2018.”
Need a home loan in Washington? Sammamish Mortgage has been serving the Pacific Northwest for more than 20 years. We offer highly competitive rates on jumbo and conforming loans alike. Please contact us if you have mortgage-related questions, or if you would like to receive a rate quote.