First Time Buyer Financing - High Balance Areas

[Cassidy Burns]

Freddie and Fannie Conforming Loan Limits for High Balance locations are increasing significantly in 2023!

2022: $647,200

2023: $726,200

$79,000 change!

This is huge not only for first time home buyers but also sellers.

Why?

Because it opens and presents MORE BUYERS for your properties that are in that $700k-$800k price point.

Let me explain:

The typical first time buyer 26-32 years old in the DMV are earning $75,000-$135,000. They are good at their jobs, well educated, BUT VERY VERY BAD with financials and saving money. Mostly because of high college loan debt.

So that presents the issue of lack of down payment, only allowing them to purchase up to that $647,200 price point mark + 3% or 103% of that $647,200 = $666,616 purchase price

NOW, what has happened with these increases is that this buyer can now buy a nicer / larger asset with very similar down payment. They can now buy an asset up to $726,200 loan amount which is a purchase price of $747,986 with only the 3% down payment

Down Payment Requirements: (excluding closing costs)

2022: $19,416

2023: $21,786

Meaning this buyer can buy a house that is $79,000 more expensive for only $2,370 additional down payment. This is great for the buyers, as they can buy the bigger/ better asset (hopefully) but also it's great for the sellers.

The sellers that owned assets in the price point between $666,000-$750,000 now have a huge number of first time buyers that can purchase their homes. More demand creates the potential for more appreciation in that asset class.

Hope this was helpful!

If you are a buyer, buy the bigger asset before the sellers / market corrects itself.

If you are a seller, be ready to put your house on the market in March 2023, thats when all the buyers will realize that this is a realty and will want to buy a more expensive house.

Happy Investing!