At a glance: Seattle loan limits for 2017 have been raised to keep pace with rising home values in the area. The new limit for a single-family home is $592,250.
Back in August, we reported that the median home price in the Seattle metro area had risen above VA and conforming loan limits for King County, Washington. This meant there was a good chance federal housing officials would increase Seattle loan limits for 2017. Well, now it’s official.
On November 23, the Federal Housing Finance Agency (FHFA) announced it would raise the baseline conforming loan limit nationwide. The agency said it was also lifting the limits for higher-cost areas that were previously above the baseline, and this applies to the Seattle metro area.
According to the agency’s news release: “In most of the country, the 2017 maximum loan limit for one-unit properties will be $424,100, an increase from $417,000. This will be the first increase in the baseline loan limit since 2006.”
But Seattle is considered a “higher-cost” area. So it has higher loan limits that exceed the baseline figure mentioned above.
Seattle Conforming Loan Limits for 2017
Here are the revised Seattle conforming loan limits for 2017:
- One Unit: $592,250
- Two Unit: $758,200
- Three Unit: $916,450
- Four Unit: $1,138,950
In this context, a “one-unit” property is a regular single-family home. “Two-unit” refers to a duplex-style property, and so on. For Seattle home buyers purchasing a single-family property, the 2017 loan limit will be $592,250. The other numbers mostly apply to real estate investors purchasing multi-unit properties.
Rising Home Prices Lead to Increased Limits
Conforming loan limits vary by county, and they are generally the same across entire metro areas. So the revised 2017 loan limits above apply to all of King, Pierce and Snohomish counties, and the entire Seattle metro area (including Tacoma and Bellevue).
The single-family loan limit of $592,250 was not pulled out of thin air. It is determined by home prices in the area. As FHFA explains:
“In areas where 115 percent of the local median home value exceeds the baseline loan limit, the maximum area loan limit will be higher. HERA sets the maximum loan limit as a function of the area median home value, while setting a ‘ceiling’ on that limit of 150 percent of the baseline loan limit.”
According to Zillow, the median home price in King County was $503,500, as of November 23, 2016. The median price in Seattle was $594,600, which is very close to the new loan limit of $592,250. This latter correlation is no coincidence. Federal housing officials pay close attention to home prices in metro areas, when setting conforming loan limits for the surrounding counties.
So home prices determine single-unit limits. The caps for multi-unit properties are simply calculated as a percentage of the single-unit figure.
But we’re getting into the weeds here. If you’re a home buyer in Seattle, this is all you need to know:
The 2017 conforming loan limit for Seattle single-family home purchases has been raised to $592,250. Anything above that is considered a jumbo loan.