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Ginnie Mae revises definition of high-balance loans in new guidance

The new definitions arrive on the heels of revised loan limits from the FHFA and FHA

Government-owned corporation Ginnie Mae announced on Wednesday that it has revised its definition for high-balance loans, conforming to new limits announced earlier this week by the Federal Housing Finance Agency (FHFA), according to All Participants Memorandum (APM) 23-13.

“Under the new definition, effective for pools or loan packages submitted on or after Jan. 1, 2024, a ‘high balance loan’ is defined as a single-family forward mortgage loan with an original principal balance (minus the amount of any up-front mortgage insurance premium) that exceeds the [new] limits,” the company said in a statement.

For the contiguous 48 states and the District of Columbia, American Samoa and Puerto Rico, the new maximum loan amounts for a one-unit property is $766,550, while in special areas, including Alaska, Hawaii, Guam or the U.S. Virgin Islands, the one-unit property limit is ​$1,149,825​​. (These figures are net of any financed mortgage insurance premium or guaranty fee.)

High-balance loans are eligible for Ginnie Mae mortgage-backed securities (MBS) under conditions specified in chapter nine of its MBS Guide.

On Tuesday, FHFA announced that the baseline conforming loan limit for mortgages backed by Fannie Mae and Freddie Mac in 2024 will increase to $766,550. That’s up 5.5% compared to the current limit of $726,200. The conforming loan limit increase slowed compared to 2023, reflecting the slower pace of home-price appreciation this year.

The Federal Housing Administration (FHA) also announced changes to its own lending limits for forward and reverse mortgages. The FHA is increasing its “floor” and “ceiling” FHA loan limits in 2024 to $498,257 and $1,149,825, respectively, for a one-unit property.

The FHA-backed Home Equity Conversion Mortgage (HECM) program operates off of a single national limit. For 2024, it is increasing to $1,149,825, or 150% of the conforming loan limits on mortgages backed by Fannie Mae and Freddie Mac.

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