Posted: 2021-10-02 | Author: Richard Simon
We have exciting news for those of you hoping to buy a home! If you've been house hunting, you may have noticed that home values in Arizona have increased substantially in the last year. If you require financing, you may have found that the Maricopa County conventional loan limit, which is currently $548,250, is simply not enough for you to find what you are looking for.
The exciting news is that one of our whole lenders has increased its convention loan limit over $75,000 to $625,000. That’s put their new limit well above the median home values in the area. What's even more exciting is that the big banking institutions do not yet offer this, and don’t plan to until January 2022 at the earliest. That means that you can take advantage of the extra funds before everyone else does.
Find out more information on our new AZ Conventional Loan Limit in this quick video from our Co-Owner Scott Roberts:
What Does The New Limit Mean For Potential Home Owners?
This new conventional loan limit we have access to will open up more possibilities for home buyers here in Arizona. Homebuyers will have more purchasing power and can get into a house for as little as 3% down, which is the minimum down payment on a conventional loan. What's better is that you can get the process started before the expected jump in interest rates and before more home buyers get in on the increase in conventional loan limits. This is important because the spring real estate season is usually hectic in Phoenix and the surrounding area, so you'll be looking at more competition, leading to bidding wars and frustration.
How Are Conventional Loan Limits Determined?
Each year, the conforming loan limits are analyzed by the Federal Housing Finance Authority (FHFA). They are adjusted to reflect the national average home price, which helps to create the conforming loan limit. Each county gets to designate its limit based on the baseline the FHFA determines. For conventional loans, Phoenix, which is part of Maricopa County, had a limit of $548,250. Since values have increased close to 30% in the last year, we expect an increase in the conventional loan limits in 2022.
In cases where the conventional loan Arizona allows won't cover the cost of the home, a home buyer would have to consider a jumbo loan. Let's look at the difference between a jumbo loan and a conventional loan.
Jumbo Loan vs. Conventional Loan
Potential homeowners who wanted to purchase a home above the previous Maricopa County conventional loan limits would have to obtain a jumbo loan to do so. Jumbo loans are non-conforming loans which means they are not federally backed. These loans do not have the same limit and are often used to purchase multi-million dollar homes. To qualify for a Jumbo loan, a borrower must have excellent credit and a low debt-to-income ratio. Jumbo loans also come with higher interest rates than the conventional loans Phoenix homebuyers obtain, and higher down payment requirements, making them less than ideal for the average homeowner.
A conventional home loan, also know as a conforming loan, still requires a good credit score and a low debt-to-income ratio. The most significant difference comes with the down payment requirements. In some cases, you can get into a conventional loan for as little as 3%. This will allow you to keep more of your hard-earned money in your pocket instead of it being tied up in your house. The underwriting requirements are more relaxed than a Jumbo Loan's, making for an overall easier home buying process.
Take Advantage Of This Headstart
We anticipate that conventional loan limits will increase for the new year and that other banks will offer the increased limit after the new year as well. This means that there will be more buyers to compete with. If you choose to work with us, you can get a head start and get into a house before the already busy spring season is saturated with buyers. Buying a home in the winter months is typically easier since not as many people are out looking, and with the capability to expand your purchase price, you will have even more of a chance of buying the perfect home for you and your family.
How Do I Get Started?
Ready to increase your budget and take advantage of our access to increased Maricopa County conventional loan limits? AZ Lending Experts is ready to go to work for you! We take a personalized approach to the home lending process and will shop dozens of lenders to find the best options for your current situation. Contact us and speak with one of our lending specialists today!