Americans in High-Cost Markets Could Now Qualify for $1M Mortgages
The Federal Housing Finance Agency (FHFA) announced this week that the cap for home loans backed by Fannie Mae and Freddie Mac is just over $1 million for the first time on record. Over 12 percent of all homes sold in October were priced at or above $1 million, and while Americans previously had to put at least 20 percent down to obtain a mortgage of that magnitude, the newest limit means that homebuyers could now be eligible for a $1 million mortgage with just a 3 percent deposit, according to the Daily Mail.
The FHFA has designated around 100 markets as “high-cost” housing destinations, and those locations will be eligible for the $1 million mortgage, though the updated cap on home loans doesn’t apply to most of the country.
Americans who reside where the cost of living is not nearly as high as in major metropolitan cities like Los Angeles and New York will be able to apply for loans up to $726,200. That number is up from the previous cap of $647,200.
Officials from the Federal Housing Finance Agency have said that they use a formula that factors in things like the cost of houses in an area and the overall cost of living.
The rise in the capped prices will hopefully help skirt more Americans away from going through private and non-federally-backed mortgage servicers.