December 4, 2020

Lender Spotlight: New Year, New Loan Limits

Unless you work in the banking or mortgage business, or are closely tied to real estate, most people do not have any care in the world about loan limits. For those of us who live in this world every day, they are a big deal. The county you live in, or want to live in, has a set loan limit that gets revised each year by the governing body, FHFA (Federal Housing Finance Agency). They determine these loan limits by checking to see what is happening with housing prices, and then adjusting accordingly. For 2021, the loan limits for Davidson County, Williamson County, and some other counties in middle TN have been set at $586,500. This seems like an arbitrary number, but it is crucial in the lending world. Any loan amount that is over this by one dollar for 2021 will be considered non-conforming, or jumbo. Loans that fall into non-conforming territory are harder to qualify for and have more restrictions and nuances that borrowers must get through to be able to borrower that much money.

These loan limits have been steadily going up year over year. They have a direct correlation to housing prices, so it is no surprise that they have been increasing. Down payment requirements for purchases are small. With these new loan limits in place, a person or family can purchase a $615,000 dollar house with only 5% down. There is still a lot of belief that it takes 10% or even 20% down to purchase a house. That is not the case. With home prices increasing year over year in middle TN with no end in sight, now is the best time to enter the market if you have been on the fence. If you have been waiting to enter the housing market, want to look at purchasing for the first time or are considering moving from your current home, please let myself and the Chord team help you with that process. We would love to help you!

Matt Ferree

VP of Mortgage Lending


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