Home prices in Bergen County, New Jersey rose steadily over the last couple of years. And the price growth that occurred during 2017 prompted federal housing officials to raise the FHA and conventional conforming loan limits for 2018.

In Bergen County, the FHA and conforming limit for a single-family home rose to $679,650 for 2018. The jumbo loan threshold went up as well. Anything that exceeds $679,650 is considered a jumbo mortgage product.

Recap: Know Your Mortgage Lingo

Before we go any further, we should define some of the terminology used here. Knowing these terms is the first step to understanding how loan limits work.

• Conventional: A conventional home loan is one that is not insured or guaranteed by the federal government. This sets it apart from FHA and VA loans, which doreceive government backing. Depending on the amount being borrowed, conventional loans can either be “conforming” or “jumbo” as defined below.
• Conforming: A conforming loan is basically a conventional mortgage product that meets the size restrictions used by Fannie Mae and Freddie Mac. These are the two government-sponosored corporations that buy mortgages from lenders. Fannie and Freddie have size limits for what they can purchase, and when a mortgage product meets these limits it is referred to as a conforming loan.
• Jumbo: A jumbo loan is a conventional mortgage that exceeds the conforming limits mentioned above. You’ll recall that the 2018 conforming cap for Bergen County is $679,650, for a single-family home. So anything above that would be considered a jumbo mortgage product.
• FHA: An FHA loan is one that is insured by the Federal Housing Administration, a government agency that falls under the Department of Housing and Urban Development (HUD). So it’s HUD that sets the limits for this program.

Bergen County Conforming Loan Limits for 2018

According to Zillow, the median home value for Bergen County, New Jersey rose by around 3.8% over the last year (as of March 2018). Prices rose steadily all throughout 2017 as well. The median value was $463,100, when last measured in February 2018.

As a result of rising prices, Bergen County received higher loan limits for 2018. At the end of last year, the Federal Housing Finance Agency (FHFA) announced that the conforming loan limit for Bergen County would rise to $679,650 in 2018.

Loan limits vary by county because they are based on median home prices, which also vary by region. The $679,650 cap for Bergen County is at the top of that range. It is the “ceiling” (or highest) loan limit used for most parts of the U.S.

FHA Has the Same Limits as Conventional, This Year

Some counties across the country have different limits for FHA and conventional home loans. But in Bergen County, New Jersey they are exactly the same for 2018.

FHA mortgages are insured by the Federal Housing Administration, which is part of HUD. This program offers a relatively low down payment of 3.5%, along with flexible qualification criteria for borrowers. Thus, it’s particularly popular among home buyers with limited savings and/or credit problems in their past.

While there are some important differences between FHA and conventional loans, the official limits are the same. In 2018, the limit for both FHA-insured mortgages and conventional (conforming) loans in Bergen County is $679,650.

Going “Jumbo” for a Higher Mortgage Amount

Borrowers with sufficient income can often borrow more than the conforming or FHA loan limits mentioned above. This is what’s known as a jumbo mortgage. In Bergen County, a jumbo loan scenario occurs when a person borrows more than the 2018 conforming limit of $679,650.

While the income requirements are understandably higher for these larger loans, the rates can actually be lower for jumbo products.

According to the latest loan application survey from the Mortgage Bankers Association (MBA):

• The average contract interest rate for 30-year fixed mortgages with jumbo loan balances was 4.6%, during the week ending on March 23, 2018.
• The average rate for 30-year fixed mortgages with conforming balances was 4.69%, during that same week.

This may seem counterintuitive. Why would larger loans have lower rates, on average? According to Joel Kan, a mortgage industry economist: “A strong appetite for jumbo loans and a highly competitive jumbo market has led to increased availability and lower pricing … over the past few years.”

So there you have it — everything you need to know about the 2018 limits for FHA and conforming loans in Bergen County, as well as the jumbo mortgage threshold. Please contact us if you have questions about your borrowing capacity, or any other financing-related questions.