2019 vs 2020 Conforming Loan Limits

Home Forums Purchase Program 2019 vs 2020 Conforming Loan Limits

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  • #70417
    clafontant05
    Participant

    I called the DC office and asked for his email. I also emailed my MC multiple times and made sure to include my NACA id. number in the subject line.

    #70933
    Amyk
    Participant

    Hi Tim,

    Have you had a chance to check with your IT guy? The property-specific letter loan limits are still at the 2019 level.

    Thanks,
    Amy

    #71236

    I also got a confirmation a few weeks back, from the Los Angeles office, that NACA would not be moving to the 2020 conforming loan limits in July 2020.


    @TTrumble
    I’m interested in getting clarity on this point, whether it’s only awaiting IT work or if NACA is scheduling the update to the conforming loan limit on a later date.

    #72106

    Has anyone heard anything on this topic of updating the conforming loan limits? I believe the FHFA will release the 2021 limits in November, but still curious if and when NACA will update to the 2020 limits.

    #72785

    FHFA has announced the conforming loan limits for 2021: https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-2021.aspx

    Any word on when NACA will switch to the 2020 or 2021 conforming loan limits?

    #73862

    Bumping this because I am running into the same issue in the DC office as well. It is 2021 and they are still using 2019 FHFA limits (726k), when the new limits are approx 100 thousand dollars more (822) and home prices have skyrocketed.

    Could anyone from NACA HQ assist and clarify what rates are in place and if not is there is any plan to institute higher limits due to rising costs?

    #73873
    grayfenix
    Participant

    I will also bump this topic because I have the same issue. I am in southern California, south orange county. Home prices have skyrocketed. The 2019 conforming loan limits are making finding anything suitable incredibly difficult. The radio silence from NACA on this issue when they are 2 years behind is very frustrating.

    #73967
    jhallas
    Participant

    @TTrumble
    Same issue here in San Diego. $690k limit from 2019, $750k in 2021. Any updates on when this will be increased? This is especially made a hassle given this requirement in the purchase workbook: “A buyer cannot pay additional funds to the seller as a down-payment to reduce the mortgage amount to be within conforming loan limits but with an out of range purchase price.” Median housing prices have increased 15% in the last two years and this not being updated to new limits along with the strong sellers market makes it very difficult to use NACA.

    #73968

    @jhallas- Wait so if the maximum loan limit is 726k, and I wanted to purchase a home the an agreed upon sales price of 746k, and I put down 20k, I cannot purchase the home even if I am approved for the 726?

    #73969
    grayfenix
    Participant

    @jhallas @TTrumble

    The frustrating part is how little send it makes for affordability.

    There are 2 main areas we can buy in here.

    One of them we can find occasionally find some houses around 720k, but they all have hoa’s from $400-500. We are allowed to make offers on those.

    In another area, homes are between 740k-780k. These have no HoA and are considerably larger. We are not allowed to offer on these, even though they would be considerably cheaper payments.

    In the last 6 months while we were going through the naca process we watched the average home price skyrocket. We have made 2 offers since we got qualified and were completely ignored on both. Both homes went for more than 30k over asking, which exceeded 2019 conforming loan limits. The competition in the market here is huge. The second home we offered on claimed to have more than 15 offers. And this was 2 days after it hit market.

    I am beginning to wonder if we are going to be able to use a NACA loan at all unless we want to buy an 800 sq. ft. up and down attached condo in some of the worst neighborhoods around us.

    #73970
    grayfenix
    Participant

    @readingrainbow That is correct. Unfortunately the total purchase price of the home cannot be above the 2019 conforming loan limit.

    Only the full purchase price of the home counts, regardless if you put money towards the principle to reduce the loan.

    The size of the actual loan doesn’t matter. If a home price is 727k, and the conforming loan from 2019 is 726k (high cost areas), you CANNOT buy it through NACA, even if you put $1000 down.

    NACA doesn’t have down payments, only principle reductions. It’s a distinction that they stick to that I don’t fully understand.

    #73971
    jhallas
    Participant

    @readingrainbow
    Yes, that is my understanding. I have no idea why that would be the case since the limits are in place for the loan, not the purchase price. Maybe something about not wanting people to have more debt by going beyond their means, but in that case it should be written that your finances would be reviewed to decide if you could do that or something.


    @grayfenix

    It’s very frustrating. Last place I put an offer on had 12 other offers. In the last month most of the properties that are listed end up going for 30k to 50k over asking. I’m looking into reaching out to owners of non-owner occupied homes in the area that I want that are not currently on the market to see if they’re interested in selling to help minimize competition.

    #73972
    Nelsont
    Member

    The distinction has to do with federal law.

    In order to be a HUD certified agency naca must comply with HUD and FHFA regulations. HUD programs operate under the Fannie Mae and Freddie Mac guidelines.

    FHFA mandates all loans above a certain amount are considered Jumbo loans which come with much stricter scrutiny (up to 30% down payment, 6 months cash reserves, 700 plus credit score etc etc) and much higher denial rate for otherwise qualified buyers (this is in direct response to the housing bubble burst of 2008 which led the dodd-frank act governing these regulations).

    Well Fannie Mae and Freddie Mac says HUD certified programs (naca) cannot offer or counsel for what FHFA considers jumbo loans.

    By offering principle reduction instead of down payment naca draws a solid line between conforming and jumbo loans. While this may be a nuisance to (sorry! 🙁 ) a small fraction of naca members it eliminates the potential gray areas and legal headaches that can arise.

    Though I totally agree. There has been almost zero communication as to why the conforming loan limit was not raised when it was posted 6 months ago (every August) and makes no sense to people outside of naca HQ.

    • This reply was modified 7 months, 3 weeks ago by Nelsont.
    #73975
    jhallas
    Participant

    @Nelsont

    I completely understand the limit of the loan being the conforming limit. You lost me on why this means they can only do principle reduction instead of down payment. What gray area or legal headache is there if they just limit the loan to be equal to the conforming limit like every other lender who doesn’t do jumbo loans?

    #73976
    Nelsont
    Member

    It’s splitting hairs. Down payment immediately reduces the LTV. Principle reduction is viewed as making additional payments on a higher valued loan. Like paying double every month just up front at the closing table. With that understanding naca would be violating the jumbo loan rule because you wouldn’t be putting up a down payment. You would be prepaying a few mortgage payments of a jumbo loan.

    It’s not that they aren’t allowed to down payments. That’s just their policy.

    • This reply was modified 7 months, 3 weeks ago by Nelsont.
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